March 26, 2009
I think it is an administrative burden to require that an amended U-4 be filed for all registered reps within 120 days. If there have been no actions by a regulator, then isn't it safe to assume there have been no willful actions. I believe that anyone who does not presently have a yes answer on their U-4 should not be required to resubmit an amended U-4.
As for requiring disclosure on a U-4 for being named in an arbitration and not specifically named as a respondent, so that the public record is available on Broker Check, seems to be a bit of overkill. Arbitrations are usually filed when a customer complaint has not brought satisfaction to the aggrieved party. That customer complaint and the name of the registered representative is already required to be reported to FINRA under Rule 3070. If a registered rep is not named as a respondent in an arbitration, you have to wonder why. Maybe the customer's lawyers feel it is a "he said she said" situation and the arbitration would be unsuccessful. In which case it could just as easily be the customer who is not being truthful. Everybody feels aggrieved when investments they have authorized do not really work out. In which case a registered rep who may have not actually violated any securities laws suddenly has a public disciplinary record because a customer decided to see if they could get some money back through the arbitration process. They often do, as firms will usually settle rather than spend their money on legal expenses. If a registered rep is named often enough, Rule 3070 is designed so that the regulators could pick it up and investigate thoroughly enough so that a violation could be brought against the registered rep. And only then should this person have a public disciplinary history. This proposal, in its attempt to protect the investing public, could very well do much damage to registered persons who do not really deserve it. Surely a registered person should be entitled to due process before he/she is publicly branded. With this proposal, it is possible that if somebody accuses you of something, you're practically guilty as far as anyone using Broker Check is concerned. There is something wrong with this proposal insofar as it is attempting to capture rougue reps (a noble endeavor)expeditiously without really doing the work. Its like tuna fishing with nets and saying too bad about the dolphins.