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Bad Brokers Beware: The Public Can Find You Now

May 4, 2018

The SEC has unveiled a database that lets investors search for information on both registered and unregistered individuals who have been involved in SEC enforcement actions and federal court judgments, ThinkAdvisor writes.

The SEC Action Lookup for Individuals, or SALI, currently only includes people against whom the SEC filed actions between Oct. 1, 2014, and March 31, 2018, according to the publication. But the regulator plans to “periodically” add parties who are part of new actions as well as those who were part of actions filed before Oct. 1, 2014, ThinkAdvisor writes.

Unlike many other online databases, which limit searches to registered professionals, SALI allows investors to find anyone who has settled, defaulted or contested an SEC enforcement action as long as the final judgment or order was entered in a federal court or administrative proceeding, the SEC says, according to the publication.

The launch comes about six months after SEC Chairman Jay Clayton announced the regulator was planning to unveil such a tool, ThinkAdvisor writes. But a former head of enforcement for Finra — which runs the BrokerCheck database with disciplinary histories of registered brokers — said at the time that the SEC’s database is likely to face scrutiny much like BrokerCheck has, according to the publication.

“For the foreseeable future, BrokerCheck will remain the gold standard for due diligence on registered brokers,” says Brad Bennett, a partner at Baker Botts and a former Finra enforcement director, according to ThinkAdvisor.

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The commission has been actively overhauling the way it monitors investment professionals in recent months, most recently unveiling a proposal for a best interest regulation that followed on the heels of an appeals court ruling to vacate the Department of Labor’s fiduciary rule that would have applied only to retirement account advisors.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.