Deadline Looms for Comments on FINRA Advisor Complaints Proposal

FINRA is taking comments on its proposal to change the rules for its current procedures for removing complaints about advisors from a central database. But time is running out, as the comment period ends May 21.

Complaint removal, or expungement, from an advisors’ records in the Central Registration Depository is important for financial advisors to seek if they are they subject of a frivolous or meritless complaint as the CRD record plays an important role in job opportunities and relationships with customers, regulators and compliance departments, says securities attorney and compliance consultant Jennifer Woods Burke, president of CompliGuide.

"When Broker Check was amended to require reporting of complaints where the broker was not named in an arbitration but may have been the subject of the complaint, it seriously affected the ability of the financial advisor to protect [his or her] reputation,” she says. “Because the financial advisor was not a party to the arbitration, he had no legal representation in the process.  Who in the arbitration was representing his interests and filing expungement requests for him? Typically no one."

Under the proposed rule amendments, the financial advisor now at least has some recourse, Woods Burke says, “although it could perhaps be streamlined further to cut expenses and time."  

Danielle Reed writes for Financial Planning.