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SEC OKs FINRA BrokerCheck Link Rule

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The Securities and Exchange Commission approved on Thursday the controversial FINRA Rule 2210 requiring broker-dealers to include a “readily apparent reference and hyperlink” to BrokerCheck on their websites.

The amended Communications with the Public rule applies to websites that will be viewed by retail investors, as well as any other Web page that includes a “professional profile of one or more registered persons who conduct business with retail investors.”

The rule does not apply to a member that does not provide products or services to retail investors, or to a directory or list of registered persons limited to names and contact information.

In approving the rule, the SEC said that requiring a link to BrokerCheck on Financial Industry Regulatory Authority broker-dealer members’ websites is designed to “increase investors’ awareness and use of BrokerCheck.”

The SEC said that requiring a hyperlink to BrokerCheck should make it “easy for investors to find and use BrokerCheck.”

FINRA’s new plan still omits what the North American Securities Administrators Association argued was one of the “most effective” parts of the original plan floated in January 2013: “deep links” to individual broker records.

FINRA must publish its new rule in a Regulatory Notice by Dec. 7. The effective date of the rule will be no later than 180 days from publication of that notice.

A deep link is a BrokerCheck link that sends the user directly to the summary reports specific to a firm or broker, and includes a firm or individual’s CRD number.

“Including direct hyperlinks and, specifically, individualized deep links would have virtually automatically and effortlessly connected investors with the specific BrokerCheck information relevant to that investor,” NASAA argued in a comment letter to FINRA.

Further, NASAA said that FINRA’s revamped plan continues to wrongly exclude email. “Continuing this [email] exclusion weakens the effectiveness of the rule,” NASAA stated. FINRA should reinstate “the deep link component” and extend the proposed rule to email as both “would strengthen the proposal,” NASAA said.

Including email “would be to have the BrokerCheck link in the signature block of the email. It could be as simple as a link to BrokerCheck, or as involved as a deep link for the rep,” a NASAA spokesperson told ThinkAdvisor in a previous interview.

These two components — email and deep links — NASAA told FINRA in its comment letter, “would be significantly more effective than ‘readily apparent references and hyperlinks’ to the BrokerCheck system in increasing investors’ real-time, day-to-day exposure to financial advisor information, especially considering electronic mail is a widely used tool to conduct business.”

The SEC did, however, clarify in its approval a question raised by the Financial Services Institute about whether the rule applies to websites maintained by financial advisors who are independent contractors. The answer: Yes.

— Check out FINRA Floats Tougher Expungement Rules on ThinkAdvisor.


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