The Financial Industry Regulatory Authority is exploring ways to give investors as well as research firms access to bulk data on broker-dealers that employ brokers with a history of FINRA violations, the self-regulator’s CEO told lawmakers Thursday.
During a Thursday oversight hearing held by the House Financial Services Committee, Rep. Stephen Lynch, D-Mass., asked FINRA CEO Robert Cook why, as reported by Reuters, FINRA’s BrokerCheck database does not permit violations data to be released “in bulk.”
Cook responded: “It’s an area we’re looking at. Historically, the [BrokerCheck] system has been set up to focus on allowing customers to look at their brokers. Over time, we’re realizing that there’s potential opportunity to having them be able to see patterns in their firm, so we have changed our policy on allowing folks to scrape information from our website so they can pull down that information.”
FINRA, Cook added, is also “looking at whether there are packages of [such] data that we could make available to researchers and others.”
FINRA announced in late July that it plans to seek comment on rule amendments relating to brokers with a history of misconduct as well amendments to allow the self-regulator to deny a new membership application if the applicant is subject to pending arbitration claims.
The requests for comment on brokers with a history of misconduct, approved by FINRA’s board at its July 18 meeting, will be issued in forthcoming regulatory notices.
Cook also said in mid-June that FINRA plans to publish additional guidance regarding broker-dealers’ supervisory obligations related to brokers that may “pose higher risk.”
Cook also noted to lawmakers that later this year, FINRA will provide brokerage firms with a new report summarizing key exam findings from across FINRA’s programs, “enabling them to use this information to strengthen their own control environment and address any potential deficiencies before their next exam.”
During his year-long listening tour that he launched in 2016, Cook said, roundtable sessions with small firms have revealed concerns about compliance with the Department of Labor’s fiduciary rule.
“Our view is that it would be helpful for investors to have a uniform standard here,” Cook said, adding that the “different standards that have developed over time, even before the DOL rule” created confusion for investors.
“We’ve got the broker rule; we’ve got the advisor rule. You need a law degree even to know what the open issues are,” Cook said.
— Check out Rep. Wagner to Introduce Bill Repealing DOL Fiduciary Rule by Sept. 30 on ThinkAdvisor.