FINRA Move on Brokers' Expungement a Good First Step

Maintaining the integrity of information contained in the CRD, as well as the IARD, is critical because state securities regulators rely upon these public records to make licensing decisions about brokers and investment advisors seeking to do business within their jurisdictions.

A sketchy CRD or IARD record often will lead a state to demand voluntary withdrawal or termination of the application. Brokers and investment advisers usually accept the state's request, but those who resist can expect formal state enforcement action in the nature of denial, suspension, or revocation of license.

According to NASAA statistics, more than 15,700 state license applications were withdrawn from 2008 to 2013. States also used CRD and IARD records to deny, revoke, suspend or condition approximately another 4,400 licenses during the same period.

Over the past five years, state securities regulators have used these public records to weed out more than 20,000 individuals in support of our responsibility to screen bad actors and others who seek to harm investors in our jurisdictions. This gatekeeper function is just one of the many ways state securities regulators work to protect investors and bolster their confidence in our financial markets and in the professionals who provide them with important financial services. 

NASAA will continue working with FINRA on reforming the expungement process, which is critical for the CRD system from both a system integrity and public policy perspective to ensure the investing public has access to meaningful information about financial professionals.