FINRA’s BrokerCheck Is Being ‘Gamed’: Lawyers
October 16, 2019 by Melanie Waddell
The Financial Industry Regulatory Authority’s BrokerCheck is unreliable as it’s being “systematically gamed, exploited and abused with one-sided hearings, manipulation of arbitrator selection, and deletion of significant customer complaints,” according to a just-released report by the Public Investors Advocate Bar Association.
PIABA’s report, which analyzes the handling of 1,078 FINRA arbitration cases from 2015 to 2018 in which brokers sought to expunge investor complaints from their record, calls for FINRA to freeze all pending expungements until “a complete independent investigation is conducted.”
The report states that there’s been a rise of more than 1,000% in the number of investor complaints challenged in the expungement process. PIABA warns that investors can no longer rely on the BrokerCheck disclosure system to investigate the brokers’ backgrounds.
PIABA is an association of lawyers who represent investors in disputes with the securities industry. “What is supposed to be an extraordinary relief measure is now being sought and granted in roughly nine out of the 10 settled cases that we studied,” Scott Ilgenfritz, the group’s president at the time, said in 2013.
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