Before I switch gears from tax to regulatory, I want to thank Tony Tuths for his informative blog last week. In response, I want to comment my objection towards the additional 3.8% tax on net investment income, sometimes referred to as passive income or unearned income. Tony, when I invest my hard earned “after tax dollars,” why should I have to pay an additional tax, just because I’m putting my money to work for me? Maybe that’s just my opinion.

OK – back to the focus of this weeks’ blog dealing with regulatory. While regulatory issues are not as glamorous as tax topics, they are equally important to be aware of and to understand. Recently, FINRA (Financial Industry Regulatory Authority, Inc.) withdrew its proposal which would have required brokers to post a link on their websites and social media pages to a database containing information about their disciplinary history. FINRA received 24 comment letters opposing this proposed requirement.

In keeping with the “protect the public theme”, the Dodd-Frank Act directed the Securities and Exchange Commission to study ways to make brokers’ background more accessible to investors. FINRAs proposal would have required brokers to attach a link on their website and social media pages to the BrokerCheck® website (the database which contains broker violations). I thought this would be a “no-brainer.” When an investor is researching a broker, it makes total sense that they have the ability to check that broker’s regulatory violations. Brokers with nothing to hide should be eager to place such a link.

Well, the opposition sited issues such as social media sites like Twitter and Linked, which only allow a limited number of characters in the biographical description page, as well as comments that BrokerCheck® is not organized well for investors to effectively search.

Both opposition issues had me confused but I am not a particularly “tech-savvy” person, in general, so the number of character issues could be true but the latter issue made me laugh. Currently, investors are given the link to BrokerCheck® via written communication. The BrokerCheck® website is adequate for this method of communication, but if an investor gets to BrokerCheck® via social media, well then the BrokerCheck website is clunky and unorganized. I guess I am missing something here.

With last Sunday being Mothers’ Day, over dinner I asked my mother, a typical investor, if she had a preference in how she learned about the BrokerCheck® website. She said, “Ah the BrokerCheck® website, hmmm, please pass the mashed potatoes.”

There you have it!

But, in all seriousness, rules and regulations are becoming more and more complex and granular and every financial service entity must stay current in these ever changing times. This blog hopes to bring this information to you.



Categories: Uncategorized

1 reply

  1. Have you ever thought about writing an e-book or
    guest authoring on other blogs? I have a blog based on the
    same topics you discuss and would love to
    have you share some stories/information. I know my
    audience would enjoy your work. If you are even remotely
    interested, feel free to send me an e-mail.

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