FINRA seeks to make BrokerCheck a more user-friendly and relevant destination for investors.  To do so, it would like the industry to comment on its proposal for changing the content and format of BrokerCheck pages.  The Comment Period ends 4/6/12. FINRA established the BrokerCheck program - then known as the Public Disclosure Program - in 1988.  Over the years, FINRA has made significant improvements to BrokerCheck - e.g., improved reports are available instantly online, and more information currently is available, pursuant to FINRA Rule 8312:

• registrations brokers hold and the exams they've passed;
• disclosure information re: criminal, regulatory,customer dispute, termination and financial matters
• current and former FINRA-registered brokerage firms and brokers are covered.

FINRA's CRD and SEC's IAPD. In 2010,the SEC expanded the Investment Adviser Public Disclosure (IAPD) database - which had previously only included information on investment adviser firms - to include information on investment adviser representatives.  FINRA's BrokerCheck ("CRD") and IAPD have many similarities, and several differences in the information available, the presentation format and the manner in which individuals may obtain information from the systems. In January 2011, SEC staff released a study and recommendations on improving investor access to IA and BD registration information, following a mandate of the Dodd-Frank Reform Act.  SEC staff offers 3 near-term recommendations for improving investor access to registration information through BrokerCheck:

• unify search returns for BrokerCheck and the IAPD databases;
• add the ability to search BrokerCheck by ZIP Code or other indicator of location;  and,
• add educational content to BrokerCheck, including investor-appropriate links and definitions.

While Dodd-Frank implementation deadlines have come and gone, its important to know that FINRA is required to implement BrokerCheck changes within 18 months of the SEC study - i.e., by July 2012.   Once that's completed, FINRA will address this intermediate-term recommendation from SEC staff:

• FINRA should continue to analyze the feasibility and advisability of expanding BrokerCheck to include additional information available in the CRD system
• e.g., the reason for and comments related to a broker’s termination, scores on industry qualification exams, formerly reportable information, as well as the method and format of publishing BrokerCheck content.  SEC staff notes that  investor input could be valuable in this context.

FINRA's Initiates In-Depth Review. Following the above suggestions, FINRA kicked off a thorough review of BrokerCheck by engaged a market research consultant to understand what investors think about the program - conducting focus groups and surveying investors. Comment Topic -  Report Design, Format and Content.   In response to a search request, BrokerCheck initially provides a user with a summary report for the requested broker or brokerage firm. For brokers, this summary report provides basic information regarding qualifications, registration and employment history, and existence of disclosure events. With respect to brokerage firms, the summary report contains information pertaining to location, profile, history, operations and the existence of disclosure events.  Users have the option of requesting a detailed BrokerCheck report, which provides additional information about the broker or brokerage firm.

• What changes, if any, should be made to the design, format or content of the BrokerCheck summary report and/or the full detailed report?
• Would it be helpful to include in the summary report a concise summary of a broker’s or brokerage firm’s disclosure events - e.g., a matrix setting forth the number and types of disclosure events - if any?
• If so, what would be the best format for the summary?  What information should it contain?

Comment Topic - Investor Awareness of BrokerCheck. During focus groups with investors, the consensus among participants was that investors should use BrokerCheck when considering whether to work with a new broker or brokerage firm. These participants stated that it was important for BrokerCheck to be more widely known among investors.

• How can FINRA best increase investor awareness of BrokerCheck?
• Should FINRA make basic BrokerCheck info - e.g., registration status, employing firm, employment location - available in such a way that would enable an investor to enter a broker’s name in an Internet search engine, see the basic information in t the search results, and be directed to BrokerCheck for more detailed information?
• Should changes be made to FINRA Rule 2267 to further increase investor awareness of BrokerCheck?
• If so, should such changes involve the items of information disclosed, the frequency and/or manner of distribution of information, and/or the member firms covered by the rule?  Should any other changes be made?

Comment Topic -  Commercial Use. Some for-profit companies have established, or are contemplating establishing, websites or services that enable users to verify or obtain information about brokers and other financial industry professionals.  These companies’ products and services likely would be targeted to fulfilling the needs of businesses and individual (i.e., retail) investors.

• Should FINRA provide BrokerCheck info to for-profit companies for commercial use?
• What are some of the benefits/concerns of such action? If FINRA were to provide BrokerCheck info to such companies, what conditions or limitations on use should FINRA consider imposing?

FINRA Staff Contacts. Direct questions to:  Richard Pullano, VP, Chief Counsel, Registration and Disclosure - (240) 386-4821; or,  John Nachmann, Ass't Chief Counsel, Registration and Disclosure - (240) 386-4816. For further details, go to:   [FINRA RegNote 12-10, February 2012]. _______________________________________________ Here are Comments Submitted to FINRA by Investor Fraud Alliance:

Investors tell us that they find the information regarding arbitrations and disciplinary actions helpful. but complain that it is formatted in the Broker‐check report in a confusing way. Many have said that the same 'action' appears over many pages, with the redundant reporting by FINRA, by the Broker‐dealer, or by others, making it appear that one reportable event could be misconstrued as two or even three, what with the detail taking up so many pages.

We had one customer tell us they were astonished when checking the disciplinary history of one of the top 5 NYSE Broker‐dealers to find that over 2,000 pages were necessary to cover the firm's record of reportable events dating back just 15 or so years.  Perhaps a summary report with an opportunity to explore the detail would be less intimidating to those who have tried to use the service but were turned off by its near‐unreadability.

Also, included in Notice 12‐10 was a comment that some regulatory entity had suggested including candidates' exam scores in Broker‐check. If FINRA or the SEC have data that show a clear correlation between exam score and professionalism, performance, and ethics on the job, let those data be made public so we can all make a decision about the relevance to an investor of such a metric. If such a correlation exists, the next step will be Complainant's Attorneys using exam performance to help make their clients' cases against RRs accused of wrongdoing. It looks like a bad idea for many reasons, though we admit it would be fun to know how some current and former NYSE and NASD personnel scored when they took their Series 7 examination, as well as how the many investment company portfolio managers scored on their Series 65 adviser examination.

[Click here to access:  IFA's Comment Page, 2/22/12]