February 11, 2013
Thank you for the opportunity to address this rule change. My legal practice has emphasized the representation of investors in claims against their brokers and brokerage firms. I have been engaged in representing investors for over 20 years. While I am a member and a past president of the Public Investors Arbitration Bar Association, I offer the followng opinions as my own.
I favor the rule change. FINRA is wise to encourage the investor to take every opportunity to learn more about broker-dealers and their registered representatives.
This rule proposal has brought to mind a couple of issues upon which I would like to comment. One of the early comments took the position that the rule is ill-conceived because the BrokerCheck reports are disorganized, repetitive and difficult to read. The commentator is partly correct, in that the BrokerCheck reports themselves are not user-friendly. I would like to encourage FINRA and the State regulators to make the CRD Reports and BrokerCheck reports easier to read and more user-friendly. Having said that, I disagree with the commentator's conclusion that the rule should be rejected on such basis. The simple fact is that BrokerCheck does provide investors with useful information, and may help investors steer clear of brokers who have an established history of customer or regulatory complaints. The goals of transparency and full disclosure certainly trump the concern about the form of the report.
My other comment, while beyond the scope of the rule proposal itself, is intended to provide food for thought. FINRA instituted rule changes a few years ago designed to limit the ability of members and associated persons to procure expungement of their CRD records. In the past couple of months, as I have perused prior awards in the course of ranking arbitrators, I have noticed that many of the recent awards are awards granting expungement requests after a hearing. This is a serious concern. In some cases brokers are getting expungements even when large sums of money are paid by the firm to settle the case. In short, I believe we need to re-examine the expungement rule. After all, while FINRA might have the salutary purpose of providing disclosure to investors with this rule change, it will mean little if the BrokerCheck reports have been sanitized of meaningful information.
I support the rule. Thank you for your consideration.