The procedure also doesn't include an appeals process for brokers whose requests are denied.
Peter Berman, a Chicago-based securities lawyer who represents brokers, says the new procedure "will make it easier for Finra to do its job." But the agency won't be likely to make changes if a firm that reported the disclosure doesn't change its mind.
"The individual broker is left trying to file an arbitration claim to address the problem," he says. That process can drag on for about a year.
The SEC approved the expansion plan on July 9. Finra plans to expand the system in two phases, according to a news release issued late Tuesday. In late August, Finra will add historic complaints to the public records of current and former brokers. Full records for all brokers whose registrations were terminated within the last 10 years will be publicly available by year-end.
Brokerages have already been providing the necessary information through the Central Registration Depository, a database available to regulators and the brokerage industry. The expansion will require reprogramming the BrokerCheck system to include that information, he says.
Finra expects to publish a regulatory notice about the expansion in the "near future," according to Tuesday's news release. Effective dates for rule changes are generally between 30 to 90 days after publication.
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