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Finra Boss Reveals Big BrokerCheck Change

September 8, 2017

Finra has reversed its policy on prohibiting third parties from gathering bulk data from its BrokerCheck platform, which lists brokers’ employment and disclosure history, Reuters reports.

Appearing before the U.S. House of Representatives subcommittee on Capital Markets, Securities and Investments yesterday, Finra chief Robert Cook said the industry’s self-regulator will let everyone download records in bulk to let site users identify trends at its member firms, according to the newswire.

As of June, Brokercheck.com’s terms of use prohibited outside parties from using software to gather bulk information, Reuters wrote at the time. Cook didn’t specify when Finra changed its stance.

Reuters had previously found 48 firms where more than 30% of the reps had disclosures on their records, according to the newswire’s analysis of data on disclosures from 2000 to 2017 in part provided by Columbia University Law School’s DataLab.

At the hearing, lawmakers also grilled Cook on Finra’s self-regulatory organization status and the level of transparency in its operations, Law360 writes. Rep. French Hill, R-Ark. questioned whether Finra should be required to abide by Congress’s cost-benefit analysis rules, but Cook said SROs aren’t subject to such requirements, according to the legal news website. Rep. Tom Emmer, R-Minn., meanwhile, said he was concerned Finra members had little insight into the regulator’s enforcement and rulemaking processes, Law360 writes.

Emmer also suggested Finra’s executives’ salaries are too high, questioned the regulator’s $1.6 billion reserve fund and its overall budget, and said the self-regulator looks “a lot more like a government agency that uses its heavy hand to extract fines,” according to the legal news website. And Rep. Brad Sherman, D-Calif., questioned whether the size of Finra’s fines — and the amount that goes to Finra rather than returned to investors — creates a conflict of interest, Law360 reports. Last year, just $27.9 million of the $173.8 million Finra collected was paid out in restitution, she said, according to the legal news website.

Cook also told the panel that he’s in favor of a uniform fiduciary standard, Law360 reports.

The Finra chief didn’t directly criticize the Department of Labor’s fiduciary rule, according to the legal news website, but said he’s heard complaints about compliance with the new regulation. He told the panel that “there’s an opportunity for the SEC and DOL to work together on this, and we will offer to be as constructive as we can,” according to Law360.

Robert Cook (Getty)

The DOL’s fiduciary rule purports to require retirement account advisors to put clients’ interest first and went into partial effect in June. The White House recently granted the DOL’s request to push back the final compliance deadline from January 2018 to July 2019. The SEC is currently seeking comment on how to go forward on its own version of the fiduciary rule.

By Alex Padalka
  • To read the Reuters article cited in this story, click here.
  • To read the Law360 article cited in this story, click here if you have a paid subscription.