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Wall Street regulator revives plan for broker disclosure link
February 5, 2014 / 9:17 PM / in 4 years

Wall Street regulator revives plan for broker disclosure link

(Reuters) - Wall Street’s industry-funded watchdog will present a retooled plan to its board next week designed to make it easier for investors to research the backgrounds of brokerage firms and brokers, according to an agenda posted on its website Wednesday.

The plan by the Financial Industry Regulatory Authority (FINRA) would require that brokerages feature a prominent link on their websites to FINRA’s free online disclosure database known as “BrokerCheck.” FINRA’s board of governors will consider the plan on February 13.

FINRA sought approval from the U.S. Securities and Exchange Commission last year for an initial version of the plan that would have required the link not only on firms’ websites, but on firm-related social media pages, such as those on Facebook and Twitter.

FINRA, however, withdrew the proposal last April after some brokerage industry groups sent letters to the SEC saying it would be difficult or impossible to feature the link on social media sites, which often limit space or require a certain format for posting information.

Details about the revised proposal are unclear. A FINRA spokeswoman declined to immediately comment on the proposal.

FINRA’s board, during the same meeting, will also consider a proposed new rule that would ban settlements in arbitration disputes between brokerages and investors that require investors to not oppose erasing details about complaints from brokers’ public records, according to its website.

Settlement agreements that provide additional compensation to investors who allege they lost money because of their brokers’ advice, in exchange for not trying to block the removal of black marks from their brokers’ records, could interfere with determining if a broker is entitled to such relief, wrote FINRA’s chief, in a letter to two U.S. lawmakers on January 24.

FINRA must seek permission from its board of governors for sending rule proposals to the U.S. Securities and Exchange Commission for review and final approval.

Reporting by Suzanne Barlyn; Editing by Meredith Mazzilli

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