On Nov. 30, 2015, the SEC approved a change to FINRA’s rule regarding release of certain disclosure information on the BrokerCheck Website. The change will release certain adverse information reported to BrokerCheck on Form U4, U5, or U6, three days after such information is received by FINRA, rather than the current fifteen days. FINRA has announced that the change will take effect Dec. 12, 2015.
While this does not change the time within which a firm must submit information (such as a termination on Form U5), it does severely reduce the time available to an individual to comment on information submitted by a firm to BrokerCheck BEFORE its release to the public. This shortened schedule may prove very difficult for an individual to meet, particularly where the firm has control of the timing of the filing of the initial form, and the individual is left to react with a meaningful response on very short notice.
It also should be noted that if a responsive Form U4 is submitted by the individual prior to the third day, that may further accelerate the release of the firm’s information, even before the expiration of the period provided by the new language in the rule. If that response is hasty and confusing, it may exacerbate public misunderstanding of the reported events. Both BD firms and associated persons should be sensitive to the accelerated schedule when dealing with reportable disclosure events.