April 16, 2009
Florence Harmon
Deputy Secretary, Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Florence Harmon:
I am writing to express my concern with the proposals made by FINRA to the U4 and U5 forms.
I have been an insurance agent for many years, and have been a registered representative for almost 10 years. Having the opportunity to provide financial services to my clients expands the ways in which we provide support to members of the community that are not ordinarily served in this way.
What concerns me about the FINRA proposals is the requirment of 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. In other words, a person would have to report allegations of sales practice complaints made against that person 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.
I believe that the typical agent's reputation may be seriously damaged by claims that are made - however erroneous, in a proceeding in which they have not been named as a defendant or respondent. While 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. Furthermore, a named party to a lawsuit or arbitration has an opportunity to refute the allegations against him and "clear his name." Someone who has not been named as a party in a lawsuit or arbitration does not have this same opportunity or ability, and any allegations made against him will likely go unanswered and unchallenged.
I therefore 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 considering my comments.
Sincerely,
Paul Dougherty