FINRA Seeks to Narrow Reporting Gap

FINRA Seeks to Narrow Reporting Gap

The Financial Industry Regulatory Authority is proposing to reduce the wait time to publish details of advisor terminations and investigations on its BrokerCheck system. 

According to a proposed rule change filed with the Securities and Exchange Commission on Monday, the industry self regulator is proposing to reduce the previously established 15-day waiting period to just three business days. 

The waiting period was set up to give advisors the opportunity to comment on any reported disclosure events, but FINRA says it’s concerned the length of the current waiting period could provide investors with an “incomplete picture” of an advisor’s history during the delayed reporting time. 

“In such cases, the broker may not be aware of all the facts and circumstances involving the disclosure event and may therefore provide only limited details about the event. In addition, some brokers may attempt to intentionally reframe the circumstances surrounding the event to put it in a light that is most favorable to the broker,” the regulator noted in its proposed rule change. 

FINRA believes the proposed three-day waiting period is more reasonable, saying it provides investors with quicker access to advisors’ disclosure information, yet still provides advisors with the opportunity to comment on any reported events.

The regulator’s board of governors approved the proposed rule change during FINRA’s meeting in February, so no other action is needed in order to file Monday’s filing for a proposed rule change, according to FINRA. If the SEC approves the rule change, FINRA will issue a regulatory notice with the proposed implementation date. 

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