April 15, 2009
Florence Harmon
Deputy Secretary, Securities and Exchange Commission 100 F Street, NE Washington, DC 20549
Florence Harmon:
I am an insurance agent and financial advisor who has spent 15 years providing valuable services to and looking out for the interests of my clients. I have very significant concerns regarding certain aspects of FINRA's proposal to revise Forms U4 and U5. While certain parts of the FINRA proposal are warranted and appropriate, my specific concern is with that part of the proposal that would revise Forms U4 and U5 to essentially 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. As I understand this provision, a person would have to report allegations of sales practice complaints made against them as long as the person was either named in or could be identified from the body of the claim, even if the person is not a party to the lawsuit or arbitration proceeding. This is way too broad and could lead to "guilt by association" very easily.
I strongly oppose the imposition of this "guilty before charged" standard which could result in my reputation and livelihood being irreparably damaged by unsubstantiated claims made in a proceeding in which I 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, 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. A named party has an opportunity to refute the allegations against him and "clear his name" but someone who has not been named as a party does not have this same opportunity or ability, and any allegations made against him will likely go unanswered and unchallenged.
I take great pride in offering the best advice and consule to my clients and work diligently to make sure that my business is both legal and ethical in every way. But I also know that some people may make accusations which have no merit, and I don't want my reputation at risk through some manner in which I don't have the opportunity to defend myself and my name.
Please do 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. Because of sleazeballs like Bernie Madoff you are under pressure to "do something" I know. But approving policies which would potentially harm innocent advisors is not going to rid the world of scoundrels. Thank you for considering my comments.
Sincerely,
Douglas Olawsky, ChFC, FIC