FINRA Proposes Change to Rule 2210 (Communications with the Public)

The Financial Industry Regulatory Authority, Inc. (“FINRA”) has filed a proposed rule change to amend FINRA Rule 2210 (Communications with the Public) with the Securities and Exchange Commission (“SEC”).  The proposed rule amendment would require each FINRA member’s websites to include a readily apparent reference and hyperlink to BrokerCheck on: (i) the initial webpage that the member intends to be viewed by retail investors; and (ii) any other webpage that includes a professional profile of one or more registered persons who conduct business with retail investors.  These requirements would not apply to a member that does not provide products or services to retail investors, or to a directory or list of registered persons limited to names and contact information.

The proposed rule change was intended to increase investor awareness and the use of BrokerCheck by investors. In its original filing with the SEC in January of 2013, FINRA  proposed a rule change to amend FINRA Rule 2267 (Investor Education and Protection), which would have required all members to include a prominent description of and link to BrokerCheck on their Web sites, social media pages and any comparable Internet presence, as well as on the Web sites, social media pages and any comparable Internet presence relating to a member’s investment banking or securities business maintained by or on behalf of any person associated with a member.

The Commission received 24 comment letters in response to the original proposed rule change. Many of the comments received on the 2013 proposed rule change expressed concern with the challenges  of implementing the proposal with  respect to social media pages, the lack of guidance with respect to terms and  phrases in the proposed amendments, and the disadvantages of using a ‘‘deep’’  link to BrokerCheck summary reports  that would bypass the BrokerCheck  homepage.  As a result of the comments received, FINRA withdrew the filing to address commenters’ concerns regarding the challenges of implementing the proposed rule change.

FINRA believes that the revised rule proposal addresses many of the commenters’ concerns voiced on the original proposal to amend Rule 2267.  The SEC has posted the proposed rule change in the Federal Register to obtain public comments to the amendments to Rule 2210.  The comment period ends August 3, 2015.