Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Running Your Business

NAIFA: Proposal Is Not Fair

Your article was successfully shared with the contacts you provided.

Federal regulators should not force securities sales representatives to report arbitration or court cases that make indirect references to the reps.

A representative for the National Association of Insurance and Financial Advisors, Falls Church, Va., makes that case in a comment letter sent to the U.S. Securities and Exchange Commission.

Gary Sanders, a NAIFA vice president, comments in the letter on efforts by the Financial Industry Regulatory Authority to update Form U4, which deals with applications for securities industry registrations and transfers, and Form U5, which deals with securities industry registration notice terminations.

SEC has the authority to approve or reject the FINRA form changes.

The proposed change regarding arbitration or litigation involving persons registered with FINRA would require the reporting of allegations of sales practices complaints even if the registered person were not named in the arbitration claim or civil complaint as a respondent or defendant, Sanders writes.

One problem is that the requirement would reduce consumers’ confidence in the reliability of the complaint records, by cluttering the records with unsubstantiated information, Sanders writes.

Another problem, Sanders writes, is that persons not named in an arbitration or court proceeding typically have no opportunity to defend themselves or attempt to refute the allegations, Sanders writes.

Because the allegations likely will go unanswered, “the damage has been done even if the claim is completely frivolous,” Sanders writes.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.