FINRA Deletes Red Flags From Brokers' Records, Says Study

Law360, New York (March 6, 2014, 3:47 PM EST) -- The Financial Industry Regulatory Authority Inc. routinely deletes "red flag" information about brokers' bankruptcies, tax liens, firings, flunked tests and sales practice abuse investigations in its background information disclosure system, according to an international securities bar association study.

In a report published Thursday, the Public Investors Arbitration Bar Association said that FINRA's BrokerCheck disclosure system hides "crucial information" about financial professionals that is otherwise available from many state securities agencies.

"The extent of omitted 'red flag' background information is so serious that unwitting investors relying on...
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