April 15, 2009
Florence Harmon
Deputy Secretary, Securities and Exchange Commission 100 F Street, NE Washington, DC 20549
Florence Harmon:
I am writing to express concerns I have regarding FINRA's proposal to revise Forms U4 and U5. My specific concern is with the part of the proposal that would require the reporting of allegations of sales practice violations made against a registered person even though that person is not named as a party (in an arbitration claim or lawsuit).
I oppose a "guilty before charged" standard which could result in reputations and livelihoods being damaged by unsubstantiated claims made in proceedings in which financial advisors have not been named as a defendant or respondent. I strongly believe that people who engage in unscrupulous or misleading sales practices should be aggressively prosecuted and subject to appropriate and meaningful sanctions, however the SEC should not allow someone's reputation to be irreparably damaged by unproven claims or allegations made in a lawsuit or arbitration proceeding in which the individual has not been named as a party. Someone who has not been named as a party in a lawsuit or arbitration does not have the opportunity or ability to refute the allegations against him and "clear his name."
I request that you not approve that part of FINRA's proposal that would require the reporting of allegations of sales practice violations made against a registered person that are contained in the body of an arbitration claim or lawsuit in which that person is not named as a party. Thank you for your consideration.
Sincerely,
Michael J. Frailey, LUTCF