FINRA has failed to fix serious flaws in brokers’ background information provided on BrokerCheck, and Congress should step in if changes aren’t implemented soon, the Public Investors Arbitration Bar Association charges in a new report.

PIABA, a group of lawyers who represent investors in cases against securities firms, says that FINRA has not corrected the flaws cited by a March 2014 PIABA report, and that FINRA “made things worse by spending millions in advertising to get unwary investors to rely on the flawed” BrokerCheck system.

The 2014 report “discussed the fact that, in reality, BrokerCheck reports often omit information about brokers that is highly relevant and necessary for investors to make informed decisions about who they may want to hire.”  Among the things not included in BrokerCheck reports, but available from many state securities agencies: (i) circumstances of a broker’s termination of employment (especially when the broker quits during the course of his firm’s investigation of his conduct);  (ii) bankruptcy filings;  (iii) tax liens;  and, (iv) test scores.

PIABA called on FINRA to implement the following:

• Ensure that all complaints, arb awards, settlements are promptly & accurately recorded in a broker’s and/or firm’s CRD record(s);
• Ensure that the data disclosed via BrokerCheck is, at a minimum, congruous with the most liberal state sunshine law;
• Include in BrokerCheck reports data concerning whether arb awards or settlements were actually paid;
• Add statistical info on the BrokerCheck home page to allow an investor to put an individual BrokerCheck report into context - e.g., include stats showing total number of registered brokers in the industry and total number in the industry with 1, 2, 3, 4, or more investor complaints on their record;
• Open entire BrokerCheck database to the public - e.g., academics and other 3^rd parties) to allow deep data analysis and development of quantitative and qualitative reports concerning brokers and brokers’ co-workers.