SEC Approves Rule Requiring Firms, Brokers Link to BrokerCheck

Over two years after it was initially proposed, a FINRA rule requiring that broker-dealers include a link to the self-regulatory organization’s BrokerCheck database has been approved by the Securities and Exchange Commission. The rule slated to go into effect, at the latest, at 180 days after the FINRA regulatory notice is published in the Federal Register. The deadline for publishing the notice is December 7, 2015.

Per the rule, a brokerage firm will have to include an obvious reference and hyperlink to the front page of FINRA’s BrokerCheck.com. Links to BrokerCheck would also have to be included on the profile pages of each broker.

FINRA has been trying to make retail investors more aware that BrokerCheck exists. The online database includes the work history of every registered broker, where they are registered, and other information, such as if they’ve been subject to disciplinary measures or named on previous securities cases.

A previous version of the proposed rule had called for LinkedIn and Twitter profiles of brokers to also include links back to BrokerCheck. However, rather than link directly to that home page, the hyperlink would have taken an investor to the BrokerCheck profile of a particular representative. Many in the industry, however, were strongly opposed to that mandate.

In its order last week approving the FINRA rule, the SEC noted how essential BrokerCheck was for helping investors make informed decisions about whether to work with a financial firm and its employee(s). If you are an investor who is thinking about working with a broker-dealer or brokerage firm, you should definitely do your due diligence, including going to BrokerCheck and finding out whatever else you can about the representative or his/her firm to make sure you are making the best choices for you and your investments.

Even when a regulator brings an enforcement action, you should still consider getting your own legal representation. Our securities law firm is here to help investors recoup their losses. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

BrokerCheck, FINRA
FINRA on BrokerCheck and Broker Compensation, Stockbroker Fraud Blog, May 30, 2015