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 concerns regarding certain aspects of FINRA's proposal to revise Forms U4 and U5. I have been a financial advisor with the same national firm for just shy of 25 years and in that time, both my firm and myself have been staunch advocates of transparency and advisor responsibility. Although reform may be warranted is certain areas, I believe this proposal would be more damaging than beneficial if approved as presented. 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. 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 must strenuously 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. While I strongly believe that people who take advantage of the public or 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. American justice has always been based on the right of a citizen to face their accuser and have the 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 consider each specific aspect of the bill and 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,
Richard J Cooney ChFC