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Heightened Scrutiny of Brokers – SEC Approves

Heightened Scrutiny of Brokers – SEC Approves

In recent years, questions have been raised in many quarters about how brokers with questionable backgrounds have been able to move among firms and remain in the industry. FINRA has responded by enhancing a broker dealer’s obligations for reviewing the backgrounds of its newly hired brokers.

The SEC recently approved proposed FINRA Rule 3110(e), which requires FINRA member firms to verify the information in Form U4 within 30 calendar days of filing. The proposed rule, which will take effect on July 31, 2015, is intended to improve the information that winds up in FINRA’s Central Registration Depository (CRD) and BrokerCheck. FINRA’s 2015 Regulatory and Examinations Priorities Letter (January 6, 2015) discusses its concern with “high-risk and recidivist brokers,” including firms’ due diligence on prospective hires, and highlights the proposed rule with respect to investor protection.

Source: Morrison & Foerster LLP

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Posted Under: EBI

Post By Barry Nixon (262 Posts)

W. Barry Nixon is the COO, PreemploymentDirectory.com the leading background screening information portal and online worldwide directory of professional background screening firms and Suppliers to the background screening industry. He co-authored the landmark book, Background Screening & Investigations: Managing Hiring Risk from the HR and Security Perspective. He also is the publisher of award winning newsletters, The Background Buzz and The Global Background Screener, and the author of the Background Checks column in PI Magazine.

In addition, Barry is a past recipient of the elite ‘Top 25 Influential People in Security’ by Security Magazine and past Co-Chair, International Committee for the National Association for Professional Background Screeners (NAPBS). He currently serves as a Global Ambassador for NAPBS.

You can contact Barry at 1-949-770-5264 or online at wbnixon@preemploymentdirectory.com