Not that we needed even more evidence that Wall Street’s primary self-regulator is a challenged organization when it comes to protecting investors but in a lead commentary in today’s Wall Street Journal, we got it.
The Financial Industry Regulatory Authority “routinely†strips out some possible red flags on brokers from its database in the information it makes available to investors, according to a study released Thursday by an organization of lawyers who represent investors in claims against brokers.Â
The study followed a Wall Street Journal investigation, which disclosed in a page-one article Thursday that more than 1,600 brokers’ records don’t show personal bankruptcies and criminal charges that should be reported.
Criminal charges huh? Such as,
The criminal charges uncovered by the Journal, which don’t show up on brokers’ records—in accordance with the current rules—include assault, sexual contact without consent, hit-and-run and habitual substance abuse.
Would you want to know if an individual soliciting you has a rap sheet with charges such as those? I would.
FINRA would maintain that how could they possibly keep up with the hundreds of thousands of brokers populating our nation and that fairness dictates that some material be expunged. I am all for rehabilitation but I am also a big proponent of protecting investors many of whom are senior citizens viewed as easy prey by unscrupulous brokers.
Investors can look up brokers on a Finra website called “BrokerCheck†and quickly find out their professional history. But the Public Investors Arbitration Bar Association, the lawyer group, said Thursday that Finra was scrubbing potential black marks from the information it provided to investors.
Scrubbing black marks? How do you spell complicit? How about ‘aiding and abetting?’
Finra defended its BrokerCheck tool. “While the system may not be perfect, we do have to make determinations on what information…is appropriate to release, while at the same time balancing fairness,†it said.
