More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
After complaints, the Financial Industry Regulatory Authority on Wednesday withdrew its proposed rule that would have required advisory firms to include a reference and a link to BrokerCheck on their websites.
FINRA had asked the Securities and Exchange Commission last September to approve further amendments to BrokerCheck that would have required advisors to include a BrokerCheck website link.
A FINRA spokesperson told AdvisorOne that FINRA 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,” and that FINRA plans to refile its proposal.
David Bellaire, executive vice president and general counsel for the Financial Services Institute, told AdvisorOne on Wednesday that FINRA’s proposal, in its current form, was “unworkable.”
Jonathan Henschen, president of the broker-dealer recruiting firm Henschen & Associates, says that "having BrokerCheck links on social media is unnecessary and extreme, perpetuating suspicion of representatives when it is not warranted."
In September, FINRA asked the SEC to amend FINRA Rule 2267, in an attempt to “to facilitate and increase investor use of BrokerCheck information,” by requiring member firms to include a reference and a link to BrokerCheck on their websites and on certain websites maintained by, or on behalf of, any person associated with a member firm.
In other words, advisors would have to include a reference and link to BrokerCheck on their websites “or any other comparable Internet presence,” Bellaire told AdvisorOne on Wednesday. “By extension, that would include social media accounts and potentially apply to some of the websites that act as aggregrators of advisors’ biographical information.”
The bottom line, says Bellaire, is that “FINRA’s proposed rule did not provide the specificity and clarity that advisors would need to properly assess their compliance efforts.” What’s more, he said, “We also believed the issue would grow in complexity over time, as more Web technology was created and put to use.”
For instance, with LinkedIn, advisors would not be able to share multiple website links on their profile page, Bellaire says, while on Twitter, there is a limited number of characters (160) in the personal description section, which would not be enough for the required BrokerCheck disclosures.
FINRA’s proposal “could be done in a more limited fashion,” Bellaire says, and “we welcome the opportunity to help FINRA find a workable solution.”
Read FINRA Seeks to Require Members to Link to BrokerCheck on AdvisorOne.