Regulators Require Financial Firms to Provide More Public Disclosure Regarding Customer Complaints


On May 13, 2009, the U.S. Securities and Exchange Commission (“SEC”) approved a rule change that requires brokers to disclose alleged sales practice violations made by a customer against a securities broker in the body of a civil lawsuit or arbitration claim, even if that broker is not named as a defendant or respondent. The SEC received a total of 1,654 comment letters on the proposed rule change. Approximately 1,451 of the letters were “form letters” from financial advisors and insurance agents (who sell insurance products such as variable annuities) opposing the change.

The SEC found, after careful consideration of the comment letters, that the rule change is consistent with the requirement “that FINRA’s rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principals of trade, and to ‘ protect investors and the public interest.”

Before investing, investors should check out their brokers and brokerage firms for possible sales practice violations on FINRA’s website, and follow up periodically. The URL is ( State securities regulators also maintain a Central Registry Deposit or CRD on brokers that sometimes contain additional information not found on FINRA’s CRD. You can find contact information for your state regulator on the website of the North American Securities Administrator Association (

Brokers are bound by law not to misrepresent and to fully and accurately disclose all facts and risks that a reasonable person would find important, for every investment presented to every customer, and brokerage firms are bound by law to adopt and implement reasonable procedures to spot and correct improper sales practices by their brokers.

Investors who have lost money and believe such losses may have been caused by improper sales practices and/or a failure of the firm to supervise its broker should consult attorneys with expertise in the matter to discuss their case and options.

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in representing institutional and corporate investors in securities cases. For further information, please contact us.