April 16, 2009
Subject: File No. SR-Finra-2009-008
From: Scott C. Ilgenfritz
Affiliation: Johnson, Pope, Bokor, Ruppel Burns, LLP
April 16, 2009
I write in support of the proposed amendment to U-4 reporting of customer complaints concerning broker misconduct, whether or not the broker is named as a respondent in an arbitration proceeding.
Under the current rules a broker/dealer is not required to report as a customer complaint an arbitration claim in which the broker is not named as a respondent. This glaring loophole in the U-4 reporting requirements must be closed. Public investors are entitled to know whether a broker with whom they are considering entrusting their life savings or with whom they have entrusted their life savings has been the subject of multiple customer complaints. That a broker has not been named as a respondent in arbitration claims should be irrelevant to the obligation to report public investors' complaints, when the broker is named in the text of statements of claim and his sales practice violations are the bases of the arbitration claims.
There are many strategic reasons why a public investor's attorney might decide that it is in his client's best interests to only name the broker/dealer as a respondent in an arbitration claim. These strategic reasons have nothing to do with the broker's culpability or with the public investors' right to full and accurate disclosure concerning brokers' customer complaint history.
To deny public investors access to this critical information under the guise of protecting brokers' privacy or protecting brokers from having unproven allegations on their public record are feeble excuses for the protection of problem brokers at the expense of public investors.
I agree with the comments submitted by Brian Smiley on behalf of the Public Investors Arbitration Bar Association. I urge approval of the proposed amendments to the U-4 reporting requirements.