FSI Seeks More Clarity on FINRA BrokerCheck Rule

FSI Seeks More Clarity on FINRA BrokerCheck Rule

Broker/dealer industry group the Financial Services Institute says the Financial Industry Regulatory Authority’s initiative to have firms link to BrokerCheck still needs work.

FINRA re-proposed its rule in June, which would require brokers to include a hyperlink to the regulator's BrokerCheck tool on their homepages and any other sites that include their professional profiles.

The updated rule only applies to websites that are controlled and operated by the broker/dealers; the previous version would have also applied to third-party sites, like social media, that firms don't control. The June proposal also no longer requires firms to use a link to the report of a specific firm or advisor; instead, it requires only a link to the BrokerCheck homepage.

But FSI says there are still areas of concern, particularly around websites of advisors who are operating as independent contractors at independent broker/dealers. While these financial advisors’ websites are supervised by the broker-dealer for compliance with FINRA rules, they are not owned by the broker-dealer.

“It is unclear from this language whether the client-facing website of a financial advisor engaged in an independent contractor relationship with their broker-dealer would be considered a ‘member website’ or a third-party website under FINRA’s proposed rule change,” FSI claims.

FINRA first proposed the controversial requirement in January 2013, but withdrew it in May 2013 after industry groups objected, including the Financial Services Institute who called it “vague" and "highly burdensome."

The Wall Street regulator then filed a completely updated rule proposal on May 27, but quickly withdrew it. It was re-filed several weeks later, in June, with a comment period ending August 3.

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