FINRA Announces Takeover of Financial Background Checks for Member Firms

Posted on July 19th, 2018 at 4:06 PM
FINRA Announces Takeover of Financial Background Checks for Member Firms

From the Desk of Jim Eccleston at Eccleston Law LLC:

FINRA has announced that effective this month, it will be responsible for the financial background checks that firms were required to conduct for the new brokers they register.

FINRA’s explanation for taking over background checks is to increase efficiency in the system by improving data quality for regulators and investors, and to lower firm compliance risks and costs. For instance, while firms were required to submit financial background checks on the information within 30 days of registering a new broker, FINRA asserts that it will turn around a financial background check within 15 days.

Overall, FINRA estimates that approximately $3 million a year will be saved for firms by avoiding the fees associated with background checks charged by vendors and late filing fees assessed by FINRA. However, FINRA points out that firms and brokers will still have a duty to keep their records up to date.

Most notably, FINRA’s takeover of financial background checks will likely lead to more discovery of failures of firm reporting, if it finds discrepancies or missing information as to what a broker reported to his new firm regarding bankruptcies, judgments or liens. Moreover, FINRA’s discovery of failures of firm reporting will thereby lead to more disciplinary inquiries.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, finra

Return to Archive



I want to thank you for your excellent professional representation. It was greatly appreciated.

Michael M.


June 23, 2022
Former Credit Suisse Advisor Prevails in Deferred Compensation Claim

A former Credit Suisse advisor has prevailed on a $2.2 million arbitration claim after alleging that the firm improperly withheld his deferred compensation when it discontinued its U.S. brokerage business in 2015. 

June 23, 2022
Eccleston Law LLC Investigates Recovery Options for NRIA Investors

Headquartered in Secaucus, NJ, National Realty Investment Advisors (NRIA) recently declared bankruptcy amid investor redemption requests, federal and state investigations, and unsustainable debt.

June 22, 2022
SEC Charges Three Additional Advisors for Recommending Horizon Ponzi Scheme to Investors

The Securities and Exchange Commission (SEC) has filed suit against Michael Mooney, Britt Wright, and Penny Flippen pertaining to their engagement with a Ponzi scheme, which raised at least $110 million from nearly 400 investors.