FINRA is seeking to increase investor awareness of BrokerCheck, its online investor tool for researching the professional backgrounds of firms and brokers. BrokerCheck is accessible to investors and all members of the public from the front page of FINRA's own website. FINRA wants to require member firms to make BrokerCheck available on their websites and through other online activities, and is seeking comment on a rule proposal to that effect.
FINRA's proposal would require a firm to include a readily apparent reference and hyperlink to BrokerCheck on each of its websites that are available to retail investors. In addition, a firm would have to include such a reference and hyperlink when it sent out a retail communication that included a profile of an associated person. If a firm posted the retail communication on a third-party website, it would have to post a hyperlink in close proximity to the profile or contact information, or post a hyperlink to the firm's own website and indicate that BrokerCheck can be accessed at that website. If it could not post a hyperlink on the third-party website, then it would have to provide the URL for BrokerCheck as part of the communication.
Under the proposed rule, a firm would not need to provide a reference or hyperlink in emails or text messages; in a retail communication posted on an online interactive forum; or in a directory of associated persons that only provided names and contact information. Moreover, these disclosure requirements would not apply to third-party websites with which the firm had no involvement that provided contact or profile information about the firm or its associated persons.
The proposal eliminates some of the more onerous provisions of the rule as originally proposed in January. For example, under the new proposal, FINRA would provide flexibility as to how to post the BrokerCheck information on third-party websites (some of which do not permit hyperlinks). The proposed rule also would clarify that the hyperlink would only be required on websites that are available to retail investors, and FINRA would no longer require that firms provide a "deep" link to the specific BrokerCheck summary reports about the relevant firm or associated person.
The comment period expires on June 16, 2014. FINRA's specific questions seek comment on several broad policy-oriented issues, such as: "Will the revised proposal increase investor use and awareness of BrokerCheck?" as well as specific input about the direct and indirect costs of the prosed rule to firms.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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