Last week, the Securities and Exchange Commission (SEC) received a proposed amendment to Rule 8313 from the Financial Industry Regulatory Authority (FINRA). Rule 8313 governs the release of disciplinary and other information by FINRA to the public. The proposed amendment to Rule 8313 would establish general standards for the release of disciplinary information to the public to provide greater information regarding FINRA’s disciplinary actions, clarify the scope of information subject to Rule 8313 and eliminate provisions that do not address the release of information to the public.
The proposed rule would eliminate the publicity thresholds and adopt general standards for release to the public for disciplinary complaints and decisions. These changes would allow FINRA to provide this additional information on BrokerCheck, which is a free online search tool that investors can use to research information about investment professionals. Additionally, the proposed rule would allow FINRA to release unredacted copies of statutory disqualification decisions, notifications and notices (subject to limited exceptions).
At a time when doubt and mistrust of Wall Street and corporate America have risen to a fever-pitch, the amendment is a welcome effort to encourage much-sought transparency. The proposed changes will allow greater access to information about disciplinary actions for the public, will help combat a broker’s ability to misrepresent his or her reputation, and will remove pre-existing provisions that stand to prevent access to information.
“It is extremely important that the public be able to verify the reputation and abilities of the financial professionals who advise customers on their retirement assets,” said Laura S. Dunning, an attorney of counsel with the Levin, Papantonio Law Firm. “The proposed rule amendment is a step in the right direction toward transparency and accountability.”
James L. Kauffman is an associate attorney with the Pensacola, Florida, law firm of Levin, Papantonio, Thomas, Mitchell, Rafferty, & Proctor. He is a member of the Business Torts Department and his practice focuses primarily upon representing individuals and entities seeking financial recovery for losses suffered from securities fraud.