| April 24
April 24 The Financial Industry Regulatory
Authority (FINRA) has withdrawn a proposal designed to make it
easier for investors to research the backgrounds of brokerage
firms and brokers, but said it would refile the planned rule.
FINRA's proposal, originally filed with the U.S. Securities
and Exchange Commission in January, would have required
brokerages to include a link on their website to FINRA's free
online disclosure database known as "BrokerCheck."
The rule would have also applied to firm-related social
media pages, such as those on Facebook and Twitter. Some
industry comments sent to the SEC said this portion of the rule
would be a challenge to implement.
"We withdrew the filing in order to give further
consideration to the comments received in response to the SEC's
publication of the proposed rule change," a FINRA spokeswoman
said in a statement provided to Reuters. "We plan to refile."
FINRA, Wall Street's industry-funded watchdog, filed a
notice with the SEC on April 18 to withdraw the proposal.
In their comment letters to the SEC, some brokerage
executives said they were concerned, among other things, about
how to apply the proposed BrokerCheck disclosure requirement in
the context of social media. In those letters, they said they
supported efforts to make BrokerCheck information more widely
available to investors.
"There is simply no way in many cases for a link to
BrokerCheck to be prominently displayed on social media sites
and, therefore, the rule is impossible to implement," said David
Bellaire, general counsel of the Financial Services Institute, a
Washington-based trade group for independent broker-dealers. The
group hopes to work with FINRA to develop a "workable solution,"
Bellaire said in a statement on Wednesday.
"If applied too broadly, the rule would effectively prohibit
broker-dealers from participating in certain social media
channels," wrote Melissa Callison, vice president of compliance
for Charles Schwab & Co Inc, a unit of Charles Schwab Corp
. Setting up and maintaining a link to BrokerCheck would
not be practical or possible in some contexts, Callison wrote in
a letter to the SEC dated Feb. 15.
Investor advocates met the original proposal with praise.
"It is part of a broader campaign to focus on more informed
investor choice," Barbara Roper, director of investor protection
for the Consumer Federation of America, said when FINRA sent its
rule to the SEC in February.
But Roper acknowledged in an interview in early April the
industry concerns about implementing the planned disclosure on
certain social media sites. "If it's really about figuring out
the logistics and not opposing the proposal, that's fine," Roper
said. Efforts to contact Roper on Wednesday were not immediately