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June 19, 2014 at 06:30 AM
Trade groups and broker-dealers continue to find fault with the Financial Industry Regulatory Authority’s plan to require firms to link to BrokerCheck in their online marketing.
In particular, many argue that posting BrokerCheck links on social media and other third-party sites where their bios appear is unworkable.
FINRA filed the first iteration of its rule in January 2013, but BDs complained that the plan was unworkable. FINRA reworked the plan, with its board authorizing in February that the self-regulator seek comment on a revised proposal to require that firms that serve retail investors include a link to BrokerCheck on their websites.
On April 30, FINRA put the proposal out for a public comment period that expired on June 16.
It also deleted the controversial requirement that firms include “deep links” to a broker’s individual profile on BrokerCheck.
While the BD firms applauded FINRA for attempting to raise public awareness of BrokerCheck through the reworked plan — with some stating that the plan will indeed raise investor awareness of the disciplinary database — they still voiced concerns, most notably about linking to third-party websites.
FINRA’s proposed rule would require advisors to include a prominent description and link to BrokerCheck on their social media accounts and other third-party sites that contain biographical information. There are some exceptions, such as directories that advisors have no control over.
The link requirement would not apply to email or text messages, a retail communication posted on an online forum (such as a message board, Twitter feed or chat room), or a directory or list of associated persons limited to names and contact information.
The Securities Industry and Financial Markets Association said in its comment letter that the proposed rule’s “imposition of mandatory content and linking requirements on third-party sites not controlled by member firms continues to raise necessity and feasibility concerns.”
SIFMA notes that “space constraints” within social media sites “may make the inclusion of both a ‘reference’ and hyperlink difficult or impossible to comply with without crowding out of the profile page the essential information the firm or its associated person wishes to convey in using the platform.”
For example, SIFMA says, a member firm “may devote considerable effort and expense to creating a branded custom header within Twitter. That custom header may or may not include text, but the platform does not permit embedded hyperlinks within those profile headers.”
In addition, on the main profile page, SIFMA continues, “only one link to an external site is permitted. Most firms, quite appropriately, would prefer to utilize the ‘link’ space to post a link to their firm’s primary homepage.” However, the rule as written “would potentially require the firm to use that link space for a link to BrokerCheck since, technically, a link to a third-party website is permitted, unless the firm also includes in the third-party social media website ‘a disclosure that informs the reader that a hyperlink to BrokerCheck is available’ through the link to the firm’s homepage.” The Financial Services Institute notes in its comment that while the revised plan addresses “the most significant challenges” of the original plan by removing the “deep link” requirement, “many challenges still remain,” including the requirements related to third-party websites.
FSI states that while FINRA’s goals with the requirements related to third-party websites “are laudable, many aspects of these requirements may not be feasible, and it is unclear whether they will actually increase traffic and awareness of BrokerCheck.”
