Your hard-earned reputation in the industry is important. Today, licensed broker and Investment Advisor records are publicly available through FINRA’s BrokerCheck or the SEC website. Regulators have also required firms to include a link to BrokerCheck on their own websites.
In 2009, FINRA rewrote rules with respect to how customer complaints are reported on a stock broker’s Central Registration Depository CRD record. The 2009 rules shifted the burden to firms to determine what disclosure information requires reporting. The landscape also changed as regulators have become more aggressive in their interpretation of FINRA’s disclosure requirements.
When a customer complaint is filed, a securities-industry employer is required to amend the securities industry professional’s Form U4 within 30 days to reflect the complaint on the registered representative’s record. Some firm’s aggressively reporting can cause product related failures to be reported on a broker’s CRD.
A brokerage firm must file a Form U5 within 30 days of the termination of a securities industry professional’s employment. The U5 form must accurately disclose the reason for the advisor’s termination.
As a result, being vigilant in protecting your reputation has become more important. Representatives have a right to seek the expungement of negative disclosures from the CRD system when:
- A customer has filed a false claim or complaint,
- A customer has filed a claim or complaint that is clearly erroneous, and/or
- A customer has filed a claim or complaint about a transaction in which you were not involved.
If you have suffered from a false or erroneous customer complaint or other type of disclosure, contact us to discuss your options.