By Hal M. Bundrick for MainStreet
NEW YORK (MainStreet) Investors are always urged to perform due diligence when hiring a financial advisor, and one platform often recommended is the Financial Industry Regulatory Authority (FINRA) BrokerCheck tool. But the Public Investors Arbitration Bar Association (PIABA) says due to a "veil of secrecy," consumers are being misled with "crucial" information being excluded from the database.
The PIABA says that the extent of omitted "red flag" background information is so serious that unwitting investors could hire a financial advisor that they would not even consider if they had access to the more complete information now being hidden.
"The veil of secrecy that exists in the current BrokerCheck system should be lifted to allow consumers access to a comprehensive, reliable source so that they can make informed decisions about a profession that has extraordinary influence over their life savings," said Christine Hines, consumer and civil justice counsel with Public Citizen, a non-profit consumer rights advocacy group.
"It is indefensible for FINRA to withhold critical information, already under its control, from the public."
Many state securities agencies offer more complete financial advisor background information than that offered by FINRA, according to the PIABA. The organization believes this data should be incorporated into the BrokerCheck system so that investors can tap comprehensive advisor data from a single source.
"All investors should be able to obtain complete and consistent information about brokers. Period. The quality of the disclosure you get about brokers should not depend on which state you live in," says attorney Jason R. Doss, president of the PIABA. "There is no rational basis for FINRA to hide key 'red flag' information that investors in some states can get from state-level agencies. Given that FINRA has failed repeatedly to take action to increase the disclosures in BrokerCheck, Congress and the SEC need to compel them to do so if necessary."