DEFENDING YOUR PROFESSIONAL INTEGRITY
Stay current on recent changes in the regulatory environment
Napoleon is credited with saying, “History is the version of past events that people have decided to agree upon.”
Since 1988, what is now BrokerCheck (previously known as the NASD Public Disclosure Program) has been the arbiter of what the industry agrees constitutes a customer dispute against a financial advisor. From then until 2010, the position was agreed upon that any customer dispute disclosure that had not been adjudicated, or was settled under $15,000 and was over 24 months old, would automatically fall off of an advisor’s BrokerCheck profile. This scenario allowed a mechanism by which brokers would not have permanent effects from allegations that had been denied or ended in nominal settlements.
Many advisors and compliance managers we talk to remember actually leveraging that rule in agreeing to settlement amounts at that time. Attorneys would advise their clients to agree to a nominal settlement knowing full well that the complaint itself would quickly be off the record. We constantly hear how an advisor’s attorney guaranteed that a particular denied or withdrawn claim would not show up anywhere. Armed with the information from that time, these attorneys were correct in their assessment.
However, in 2010, FINRA built a virtual time machine for these old disputes and enacted the first major change to BrokerCheck. These “historical complaints” as FINRA called them were now back up on the BrokerCheck profile for the advisor and potential clients to see. In the interest of investor transparency, FINRA reposted these old disputes back to 1999 that had previously met the non-reportable criteria. Today, if nothing else is done, these disclosures now stay up on an advisor’s profile permanently (or until 10 years after the advisor leaves the industry).
This rule change went largely unnoticed as the early days of BrokerCheck were unimpressive. Web traffic was minimal, investor awareness was low, and accurate disclosures were few and far between. Cut to today, advertising of the BrokerCheck site has gained a lot of steam. Now with direct links to BrokerCheck required by FINRA on firm and advisor webpages, and millions of dollars being pumped into advertising, BrokerCheck (along with these disputes of days gone by) stands front and center.
Thankfully, through Rule 2080, we are allowed to develop our own time machine. Under this rule, we have options for brokers seeking expungement of these “historical complaints” that we can show were due to false or erroneous allegations. We can literally erase these versions of past events from your BrokerCheck profile and CRD.
If you have any of these old meritless customer disputes on your record, contact us today to discuss the process.
EA, Executive Vice President
3400 Industrial Lane, Unit 10A
Broomfield, CO 80020
This blog is my ongoing effort to inform and educate FINRA licensed professionals about the evolving regulatory ecosystem in which we operate.