August 31, 2009
I appreciate the opportunity to comment on FINRAs proposed changes to Rule 8312. FINRA recently employed a national advertising campaign to show how it has been protecting public investors. See FINRA Launches Enhanced Investor Protection and Education Programs News Release dated June 15, 2009. FINRA Chairman and CEO Richard Ketchum summed it up best when he said The recent market turmoil makes it more important than ever that investors be aware of FINRA and the tools and resources that we provide to help them plan their financial futures, protect their interests and make informed investment decisions.
Broker Check has been one of those tools that investors can use to make informed decisions. Under the rule proposal for Rule 8312, FINRA proposes to expunge a registered representatives record from Broker Check if that representative has been out of the industry for two years. Rule proposals like this will certainly work against the ideal of protecting investors and against FINRAs stated objectives.
FINRA should make a former registered representatives record available on Broker Check for a much longer time – at least 5 years, if not 10 years. After leaving the securities brokerage industry, many former registered representatives go on to similar positions or industries, such as investment advisory services or insurance sales. In fact, sometimes a broker is driven to leave the securities industry solely because of arbitration claims being filed against him or her. The proposed rule would help the broker hide their negative history and will be a detriment to investors. A potential client should be able to look up a former registered representatives history for much longer than two years, so that the potential client can adequately evaluate them.
Prospective clients should have access to full disclosure to make rational, informed decisions for themselves. While Broker Check is one of those important tools that investors can use to make informed decisions, this rule proposal goes against that notion. Again, I appreciate the opportunity to comment on this proposal.
Sincerely,
David Neuman