April 17, 2009
As a securities arbitration attorney and member of PIABA I support the proposed rule change with regard to the arbitrary manner in which disclosures of arbitration claims are revealed in the CRD system. The current system is entirely dependent upon what a Claimant's attorney does with respect to naming a registered representative as a Respondent or not. Such attorney has no obligation to consider the ramifications to the CRD system when he drafts a Statement of Claim and thus the current rules have a flawed foundation. In addition, such CRD records impact upon another issue in FINRA arbitration - that of the industry arbitrator. As the industry arbitrator is screened based on the CRD system, in reality no doubt there are many industry arbitrator who were the subject of many claims which have gone unreported and yet are sitting on panels determining similar issues regarding other representatives and firms. To the extent FINRA maintains the requirement of an industry arbitrator on each panel, the issue of the validity and accuracy of the CRD system is front and center.
Although there is some potential for abuse by firms in how they administer such a rule, as they may utilize such reporting as a tool in any independent dispute with such employee, as has been done in the past, such abuse should be carefully policed by FINRA. FINRA should ensure that such reporting does not simply become a tool of abuse by firms to falsely tarnish a person's record if he/she in fact is not the main subject of the Claim and rather his/her name just happens to be mentioned in a claim. Such false reporting would also negatively impact the accuracy of the CRD system which is essential for all concerned with the system.