Deleted: FINRA Erases Many Broker Disciplinary Rec
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Posted On: 01/05/2016 4:11:39 PM
Deleted: FINRA Erases Many Broker Disciplinary Records
By Ann Marsh
December 31, 2015
No client who signs on with a broker expects that doing so will turn her into a regulator.
But every year, more than 100 clients find they've become quasi-regulators – and do very badly at the job – for FINRA, whose mission is to "make sure the securities industry operates fairly and honestly" by acting as the self-regulatory organization for the nation's 640,000 brokers, according to its website.
It does so by essentially forcing some clients to maintain the integrity of BrokerCheck, the widely used online tool that purports to allow investors to easily search the disciplinary records of financial advisors and firms registered with the Financial Industry Regulatory Authority or FINRA.
A Financial Planning investigation shows that a systematic expungement, or purging, of numerous advisors’ disciplinary histories not only raises questions about the value of BrokerCheck, but more crucially about whether the arbitration system used by FINRA’s leadership is rigged to hide investor complaints that could have provided a warning to other investors.
"It's not a fair process," a former Royal Alliance client, Sandra Liebhaber, says of her experience in a FINRA hearing, in which arbitrators prevented her from arguing against her former broker's request to erase the public record of Leibhaber's case.
Numerous securities lawyers say FINRA’s arbitration system for investor complaints encourages them to take settlements and remain quiet. Those deals also require they not oppose wiping an advisor’s BrokerCheck record clean, even though the regulator banned the practice last year. FINRA is considering recommendations to fix this and other issues with the arbitration process.
Absent an overhaul of the process, critics say FINRA will essentially remain a private club sitting in judgment of its own membership. Due to arbitration clauses investors sign when they become clients, investors are forced to seek justice from a group composed of industry players.
At risk are the life savings of Americans who choose to trust advisors who may have already caused other investors financial harm. FINRA is run by many of the same firms whose clients lose between $8 billion to $33 billion in retirement savings annually due to conflicted financial advice, according to the White House Council of Economic Advisers.
original post by a friend
By Ann Marsh
December 31, 2015
No client who signs on with a broker expects that doing so will turn her into a regulator.
But every year, more than 100 clients find they've become quasi-regulators – and do very badly at the job – for FINRA, whose mission is to "make sure the securities industry operates fairly and honestly" by acting as the self-regulatory organization for the nation's 640,000 brokers, according to its website.
It does so by essentially forcing some clients to maintain the integrity of BrokerCheck, the widely used online tool that purports to allow investors to easily search the disciplinary records of financial advisors and firms registered with the Financial Industry Regulatory Authority or FINRA.
A Financial Planning investigation shows that a systematic expungement, or purging, of numerous advisors’ disciplinary histories not only raises questions about the value of BrokerCheck, but more crucially about whether the arbitration system used by FINRA’s leadership is rigged to hide investor complaints that could have provided a warning to other investors.
"It's not a fair process," a former Royal Alliance client, Sandra Liebhaber, says of her experience in a FINRA hearing, in which arbitrators prevented her from arguing against her former broker's request to erase the public record of Leibhaber's case.
Numerous securities lawyers say FINRA’s arbitration system for investor complaints encourages them to take settlements and remain quiet. Those deals also require they not oppose wiping an advisor’s BrokerCheck record clean, even though the regulator banned the practice last year. FINRA is considering recommendations to fix this and other issues with the arbitration process.
Absent an overhaul of the process, critics say FINRA will essentially remain a private club sitting in judgment of its own membership. Due to arbitration clauses investors sign when they become clients, investors are forced to seek justice from a group composed of industry players.
At risk are the life savings of Americans who choose to trust advisors who may have already caused other investors financial harm. FINRA is run by many of the same firms whose clients lose between $8 billion to $33 billion in retirement savings annually due to conflicted financial advice, according to the White House Council of Economic Advisers.
original post by a friend
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