FINRA’s New Rule Proposal for Brokers’ Background Check

Posted on September 30th, 2014 at 8:01 AM

From the Desk of Jim Eccleston at Eccleston Law Offices

FINRA is launching a new rule that would require brokers to put in place written procedures to verify the accuracy of information contained in their Forms U-4, the foundation for broker profiles on the FINRA’s BrokerCheck database. The new rule will streamline and clarify member brokerage firms’ obligation to perform background investigations, and improve firms’ compliance efforts.

As part of its effort to clean up BrokerCheck, FINRA also is conducting a one-time review of financial public records — searching for bankruptcies, judgments and liens — on each of the approximately 630,000 brokers registered with the organization.

Even though FINRA insisted that the new rule would not add unreasonable costs on member firms because they already have a background-check system, the rule is still raises questions because the rule could result in a  heavy cost burden for a small to medium-sized firm.


The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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