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Regulation and Compliance > Federal Regulation > FINRA

SEC Agrees to FINRA’s BrokerCheck Change on Posting Firings

By Melanie Waddell

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The Securities and Exchange Commission approved Monday the Financial Industry Regulatory Authority’s plan to reduce from 15 days to three the release of disclosure information filed on Form U5 through BrokerCheck.

Firms use Form U5 to terminate broker registrations with self-regulatory organizations and the states.

Most of the information that FINRA releases through BrokerCheck generally is made available the day after it is filed with the Central Registration Depository system.

FINRA’s Rule 8312, however — which governs the information FINRA releases to the public via BrokerCheck — provided for a 15-day delay in disclosing terminations.

The 15-day waiting period, according to FINRA, was established to give brokers on whose behalf the Form U5 was submitted an opportunity to comment on the disclosure event either through a Form U4, which firms use to register brokers with SROs and the states, or by submitting a comment directly to FINRA.

Beginning on Dec. 12, the 15-day delay will be reduced to three business days.

FINRA stated in Regulatory Notice 15-49 that “a three business-day waiting period is more reasonable than a 15-day period because it allows investors to more quickly access disclosure information reported on Form U5 while at the same time still providing brokers the opportunity to comment on the reported disclosure event.”

Jon Henschen of the broker-dealer recruiting firm Henschen & Associates explains that when a rep is terminated, the broker-dealer has up to 30 days to file the “wording on the termination” and then FINRA had up to 15 days to list (now three) the wording on the termination on BrokerCheck. 

“For brokers needing to find a new broker-dealer due to a termination, the 30-day period is the biggest frustration” in their ability to find a new broker-dealer because it’s “often times put on hold until the wording is disclosed,” Henschen says. 

Putting such information onto BrokerCheck “is less of an issue,” Henschen argues, as “only 1%” of those accessing BrokerCheck are actual investors. So the change to FINRA Rule 8312 to the general public, he continues, “is almost a nonevent.” BD recruiters and compliance pros “are the primary users of BrokerCheck, not the public.”

— Check out Stock Jocks Get Their Knocks at BDs on ThinkAdvisor.

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