The Financial Industry Regulatory Authority has temporarily withdrawn a controversial proposal to require advisors, brokers and firms to incorporate links to the BrokerCheck database when they post content to social media sites.
Critics, the Financial Services Institute among the most prominent, warned that the rule would have imposed an unrealistic mandate on advisors, and effectively put social media outlets off limits for industry practitioners.
FSI General Counsel David Bellaire heralded FINRA's decision to rescind the proposed BrokerCheck social-media rule, saying that ensuring the prominent display of a link to the registry on all social sites is "something that is out of the control of firms and advisors."
"While FSI greatly values expanding investor knowledge of and use of BrokerCheck, we believe that the proposed rule was vague, highly burdensome and did not appropriately achieve this goal," Bellaire said in a statement.
"There is simply no way in many cases for a link to BrokerCheck to be prominently displayed on social media sites and, therefore, the rule is impossible to implement," he added. "FSI and our members hope to work with FINRA to develop a workable solution which truly provides investors with access to BrokerCheck information."
The FSI and others will get their chance, according to FINRA spokeswoman Michelle Ong, who said that the group is only tabling the matter for the time being as it reviews comments submitted after the proposed rule was made public.
"We withdrew the filing in order to give further consideration to the comments received in response to the SEC's publication of the proposed rule change," Ong wrote in an email. "We plan to refile."
FINRA's move closely follows the decision by the SEC earlier this month to clarify its guidance for publicly traded companies looking to make material disclosures on social sites. In that report, the agency affirmed that the businesses it regulates can indeed post important corporate information on social sites, provided that those media outlets are generally available and investors have been given notice about where to anticipate announcements, marking the latest sign that the social Web is moving into the mainstream of the financial-services industry.
FINRA's registry of member firms and individuals who work for them is offered as a public-facing research tool to help investors vet financial professionals. FINRA advertises BrokerCheck as "the first resource investors turn to when choosing whether to do business or continue to do business with a particular firm or individual."
The system culls information from the Investment Adviser Public Disclosure (IAPD) database maintained by the SEC, and the Central Registration Depository that compiles licensing and registration information about brokers and their firms.
FINRA says that BrokerCheck offers background information on some 441,000 investment advisor representatives and 45,700 advisor firms, as well as 1.3 million brokers and 17,400 brokerage firms.