Investment Advisor Representatives Face New Public Disclosure

Posted by on Jul 13, 2010 in Investment Advisors, Securities Regulation | Comments(0)

FINRA registered representatives have faced public disclosure for quite a while. In fact, public disclosure, including time before it was on the web, has been around for close to 20 years I think.

Initially, a request was made in writing or by telephone. Then the NASD, as it was known at the time, would print out a report and send a copy to the requestor. The firm and the broker would also receive notification of the request. That has gone by the wayside. Like so many other things, the Internet has changed things.

Now, anyone who’s interested can simply log on to FINRA Brokercheck, follow the instructions and you’ll see what’s available from FINRA. Many states, Florida included, will give a requestor a copy of the broker’s complete CRD record, which is much more thorough. This worked for stockbrokers, but investment advisor representatives were a different animal.

For instance, a broker could lose his/her license and still get a job with an investment advisor. The public customer might not think to look at either the Brokercheck or CRD reports. So the broker might have issues in his/her past that would give the client a reason to move on. But without a coherent reporting system, the client was operating in a vacuum.

Things have now changed. The SEC has significantly upgraded its online disclosure system, which used to be called IARD. It is now called IARD and you, dear reader, can find it here.

Disclosure is good. On the SEC system, one can search by representative name or firm name. The reporting is not perfect, but it is much better and more extensive than it was before. So the next time a good-looking, smooth-talking, salesperson is sitting across your kitchen table pitching his/her firm’s great management abilities, get out your laptop and log on to the IAPD. Maybe you’ll find something that will make you think twice, or at least ask more questions.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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