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 13 years building client relationships. Through my efforts, I enjoy an impeccable record of compliance and disclosure with my clients. I am writing to express the significant concerns I have 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. It is inappropriate to try and reform regulation at the expense of making innocent professionals the subject of potential "witch hunts".
No lay person can begin to understand the current regulatory issues that advisors need to adhere to for fee based accounts, and any potential hint of impropriety today tied to an advisor is just like a guilty verdict. From Madoff to all the other unscrupulous advisors that have and continue to surface, it is quite obvious that the issue is the poor policing by the SEC and sister agencies, not the lack of regulatory rules in place. This is an attempt to automatically shift the blame for every client complaint to the advisor or professional even if the complaint is groundless and the advisor is not a party to the core issue. It seems that everyone enjoys the privilege of privacy and protection from any form of discrimination except those that follow the rules and those individuals can have their reputations tarnished unfairly at the whim of an irresponsible or vengeful person without any recourse.
Every advisor should be held accountable for their misdeeds but everyone cannot be arbitrarily lumped together. To put a professional's name in the public domain when he or she is not even named or involved in the issue under consideration is totally irresponsible and does nothing to serve the public interest.
I therefore request that you not approve that section 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 considering my comments.
Sincerely,
Richard N. Preston, ChFC Wealth Mgmt. Advisor