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SEC eyes advisor database changes

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If you’re a licensed securities representative or investment advisor, expect to have greater transparency with consumers in the months ahead. That’s because the Securities and Exchange Commission is looking to make more background data available, more conveniently, in response to Dodd-Frank financial reform legislation.

The recommendations, part of a study required by Section 919B of the Dodd-Frank Wall Street Reform and Consumer Protection Act, must be implemented within 18 months after the study’s completion.
Investors currently must search two separate databases for information about broker-dealers and investment advisors.

The primary recommendation of the study is to enable investors to simultaneously search both databases using either FINRA’s BrokerCheck website or the Investment Adviser Public Disclosure website and receive unified search results.

Other recommendations from the study include:
Expanding the search functions of BrokerCheck and IAPD to permit searches for broker-dealers, investment advisors, registered representatives and investment advisor representatives, based on ZIP code or other indicator of location. Enhancing BrokerCheck and IAPD by adding educational content, such as links and definitional material.

The study recommended after the 18-month implementation period, Commission staff and FINRA continue to analyze, including through investor testing, the feasibility and advisability of expanding BrokerCheck to include information currently available in the Central Registration Depository as well as the method and format of publishing that information.

It also recommended that Commission staff continue to evaluate expanding IAPD content and the method and format of publishing that content, including through investor testing. Potential modifications could include adding summary data for advisory firms on IAPD, hyperlinks between CRD numbers and SEC file numbers containing information related to a particular CRD number and additional links to content available elsewhere on BrokerCheck or IAPD.

Although greater transparency can help consumers, it also raises the bar for advisors to avoid black marks that could permanently tarnish their records. As always, staying focused on ethics and compliance is your best policy for long-term reputation management.