National investment fraud lawyers KlaymanToskes reports the SEC has approved a new FINRA BrokerCheck Rule that will release information on BrokerCheck identifying “restricted” firms that present a high degree of risk to the investing public.
According to the approved SEC order, the rule change will amend FINRA Rule 8312 (FINRA BrokerCheck disclosure) to release information on BrokerCheck flagging “Restricted Firms” with certain numeric thresholds of firm-level and individual-level disclosure events pursuant to FINRA Rule 4111 (Restricted firm obligations) and Rule 9561 (Procedures for Regulating Activities Under Rule 4111).
What is FINRA BrokerCheck?
FINRA BrokerCheck is a free tool provided by the Financial Industry Regulatory Authority that helps investors learn more about their brokerage firms and financial professionals by accessing their public disclosure history, including pending and settled investor complaints, employment history, regulatory actions, personal bankruptcies, and criminal history.
If your broker’s profile has significant disclosures, KlaymanToskes highly recommends reviewing your accounts for misconduct similar to that alleged in the disclosures.
Investors that believe their investment losses may be a result of misconduct and/or securities violations are encouraged to contact attorney Lawrence L. Klayman, Esq. at (888) 997-9956 or lklayman@klaymantoskes.com to discuss recovery options. All consultations are free and we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
How Will “Restricted” Designations Be Displayed? What is the Purpose?
The SEC’s order states that the “restricted” designations will begin appearing “no later than” FINRA’s second annual evaluation of its member firms in June 2023.
The “restricted” designation will be displayed prominently on the firm’s BrokerCheck page and will include a link with further information explaining why the firm has been designated as high-risk by FINRA. The disclosure of “restricted firm” designations will indicate if the firm is subject to a “Restricted Deposit Requirement” ordering it to deposit cash or qualified securities with an aggregate value that is not less than the member’s Restricted Deposit Requirement.
According to FINRA, the rule “creates incentives” for firms and individuals to change their behaviors and activities, either to avoid being designated or re-designated as a “Restricted Firm” and is designed to protect investors and public interest by “strengthening the tools available to FINRA to address the risks posed by member firms with a significant history of misconduct.” One commenter on the proposal for the new rule stated that the disclosure of a member firm’s “Restricted Firm” status would be a “Scarlet Letter.”
About KlaymanToskes
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956