Shine a Bright Light on a Dark Industry

Sunlight is said to be the best disinfectant. As investor advocates, we're all for more transparency and accountability on the part of financial brokerages. That's why we were dismayed by a recent decision by the Financial Regulatory Authority or FINRA to withdraw their proposal, originally filed with the SEC early this year, to make it very easy for investors to conduct background checks and explore the disciplinary history of brokerage firms and brokers. FINRA had been moving forward quickly with a proposal to compel all registered firms and brokers to include direct links on their websites to FINRA's free research and disclosure website called "BrokerCheck." Additionally, FINRA had also hoped to force brokers to feature prominent links to BrokerCheck on any firm-related social media pages. This last aspect of the proposal received the most push-back from financial industry executives, and caused FINRA to climb down and reassess. Brokers who criticized the proposal suggested that although they did not oppose FINRA's plan in principle, they felt that implementing especially the social media aspects would be so challenging as to prevent them from participating in social media at all. Whatever the truth of that claim, FINRA has decided to regroup and refile soon. 

We hope they do. Easy access to BrokerCheck means investors will be able to "check under the hood" of prospective brokers who may claim to be clean and successful but in fact have a tarnished history of multiple complaints against them. We believe that more access and more transparency means fewer incidents of financial misconduct and fraud. This is progress. One of the reasons brokers get away with multiple acts of fraud is that there's no easy way for investors to verify the brokers own claims about him or herself. Where else can you turn to figure out if your broker, who's investing your hard-earned money, is as trustworthy and reliable as he or she or even her firm says they are? BrokerCheck is an incredible resource, and we're eager to have it available as easily and widely as possible. Hopefully, in the very near future FINRA will re-launch its proposal and shine more bright light on an industry with far too many dark corners.

If you or anyone you know has been the victim of broker misconduct or investment advisor fraud, please contact us for a free consultation.