February 10, 2013
We have had the pleasure and privilege of representing investors in securities arbitration matters for more than 20 years. We dedicate ourselves to assisting investors to recover losses as a result of broker misconduct. We take our work seriously and don't undertake representation unless we are convinced that a genuine wrong has been committed.
In its proposed rule, FINRA is to improve the distribution of publicly available information about FINRA Member Firms and their Associated Persons.
Our experience has been that the securities industry improves each time FINRA Member Firms and Associated Persons are required to disclose more information about their regulatory and criminal histories as well as their history of complaints, lawsuits, and arbitration claims.
There is no question that the information contained in Brokercheck reports impacts a clients ability to gain relevant information about their broker and brokerage firm, and aids every client in making a decision whether to trust a member firm or associated person. Requiring Member Firms to post a link on their websites to FINRAS Brokercheck service improves the disclosure process by making information about stockbrokers and brokerage firms easier to access by existing and potential clients.
We see one commentator concerned that providing Brokercheck reports to investors might cause confusion for an investor. Another commentator calls the occasionally duplicated entries undecipherable gibberish. These comments are unfounded. In every Brokercheck report, there is a chart, which precedes the critical disclosures, tallying the number of regulatory actions, arbitration claims, customer disputes, criminal actions, personal bankruptcies and more. Just by reading the chart and nothing else, a reader gets an immediate impression of how that firm or stockbroker does business.
The main benefit of Brokercheck is the summary report for each disclosed event. The summaries provide the reporting party as well as the firm or broker to make a public statement about each disclosure. These reports and rebuttals create opportunities for clients to ask questions, sometimes uncomfortable questions, about a broker or firm and decide whether that trusted broker is truly to be trusted.
Full disclosure leads to efficient market-driven regulation. Firms and brokers with clean records will thrive with new clients, while sloppy firms and brokers will have to improve their practices to stay in business.
We look forward to the approval of this proposed rule change and the increase in public disclosure it will bring.
Jonathan W. Evans and Michael S. Edmiston