The Securities and Exchange Commission (“SEC”) has approved a proposal by the Financial Industry Regulatory Authority, Inc. (“FINRA”) to allow it to publicly release any disciplinary complaints or decisions it issues against registered representatives, registered investment advisers (“RIAs”) or broker-dealers. Moreover, FINRA will be permitted to release information regarding the names of the parties involved, but is given authority to redact such information when FINRA deems necessary. This disciplinary information will be disseminated through a monthly notice and on FINRA’s online disciplinary action reporting system. FINRA’s June Notification can be viewed here. With regard to FINRA’s proposal, on June 21, 2013, the SEC made the following statement, “[t]he Commission believes that the proposed rule change promotes transparency, consistency across FINRA’s program, and clarity regarding the information FIRNA releases to the public and will provide greater access to information regarding FINRA’s disciplinary actions.” Many critics of this proposal feel that FINRA disciplinary complaints that are dismissed or withdrawn should not remain on the published notifications forever. The SEC, however, rebutted this criticism by stating that dismissed and withdrawn disciplinary complaints are already permanently publicized on a registered representative’s FINRA BrokerCheck Report.
Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses. Please contact our team of attorneys for a consultation at (212) 696-1999.