UPDATE: FINRA Runs Into Trouble. Forced to Take Down Its New Disciplinary Actions Online Database

May 20, 2011

BREAKING STORY: Friday May 20, 2011

Updated at 2PM ET

On May 16, 2011, the Financial Industry Regulatory Authority ("FINRA") announced the launch of its new online database: FINRA Launches New Disciplinary Actions Database: Web-Based Tool Allows Public Access to Disciplinary Documents. In that Press Release, FINRA stated:

[T]he database enables users to perform searches for FINRA actions free of charge, seven days a week. Users may search for actions by case number, document text, document type, action date (by date range), a combination of document text and action date, individual name and Central Registration Depository (CRD®) number, or firm name and CRD number. The documents can be viewed online, printed, or downloaded as text-searchable PDF files.

Previously, the public had to contact FINRA to obtain copies of disciplinary actions. The new database makes available disciplinary action documents including Letters of Acceptance, Waivers and Consent (AWCs), settlements, National Adjudicatory Council decisions, Office of Hearing Officers decisions and complaints.

BrokerCheck® reports will now link to disciplinary actions housed in the system, as it currently does for arbitration awards in the Arbitration Awards Online database. Beginning June 15th, FINRA Monthly Disciplinary Actions will also link each write-up to its corresponding action in the database . . .

Better Late Than Never

I applaud this new database and concur that it will prove to be a signifcant resource for the industry and investing public. For many years, I have criticized the old NASD and its successor FINRA for failing to provide online links to its regulatory database. See, for example this commentary in The Great Debate: FINRA (BrokeAndBroker.com, January 25, 2010):

BILL SINGER: We disagree The NYSE continues to separately adjudicate and publish disciplinary cases and resorts to the SFC in lieu of FINRA/NASD's AWC process. Moreover, all NYSE online cases include a link to the underlying settlement/decision, whereas FINRA does not attach such links to its monthly disciplinary squibs. That is not consolidation but a perpetuation of two different SROs.

FINRA, We Have a Problem

If you visit FINRA's new, much-ballyhooed database this morning, you're going to be in for one helluva surprise. Here's what will greet you:

FINRA Disciplinary Actions Online Database

FINRA's Disciplinary Actions Online Database is temporarily unavailable. A number of documents were found to have been corrupted during the imaging process. To ensure the integrity of the documents provided through the database, we are re-imaging them and expect to be back live very soon. If you have already downloaded documents, once the database is fully re-populated, we recommend you return and retrieve them again.

We apologize for any inconvenience.

Putting This In Perspective

How about we put this FINRA website debacle into some perspective. 

FINRA routinely holds its member firms' feet to the fire for all sorts of mishaps.  Among some of the more troubling complaints from the self-regulator are those alleging failures by third-party service providers -- screw-ups that often involve the failure to archive information or use the proper form of electronic storage. You can read some of the recent cases involving these violations at RRBDlaw.com . While many of these cases are based upon reasonable concerns, there is often more than a bit of sanctimonious posturing.

As such, permit me to take just a quick, modest poke at FINRA's eye over the regulator's failure to timely discovery the corruption of its online disciplinary database. 

I mean, you know, weren't there any red flags that should have alerted FINRA that there were (or could have been) problems with the imaging process? 

Shouldn't FINRA have created a redundant back-up system to anticipate just this type of mission-critical failure (oh, how I hate that phrase!).

Okay, that was fun and now I feel much better.

So . . .  here's the bottom line. I love the new database. It provides us all with important source materials and evens the playing field. I have long agitated for this online product -- even if FINRA's management refuses to engage in a constructive dialog with me -- and am thrilled to see that my years of complaining may have prompted the reform.  Nonetheless, you will allow me this sarcastic shot -- no?

2 PM Friday UPDATE

I guess the folks at FINRA read my column because this new iteration is now running:

FINRA Disciplinary Actions Online Database

Search for FINRA Disciplinary Actions

You can conduct a search for FINRA disciplinary actions that were issued during 2006 or later, and are eligible for publication pursuant to FINRA Rule 8313 (Release of Disciplinary Complaints, Decisions and Other Information). Results will also include opinions issued by the SEC and federal appellate courts that relate to FINRA disciplinary actions that have been appealed.

Search the FINRA Disciplinary Actions Online database using any combination of the following criteria:

  • Case Number
  • Document Text
  • Date Range
  • Document Type
  • Individual Name or CRD#
  • Firm Name or CRD#

Note: Shortly after launching the Disciplinary Actions Online Database, FINRA discovered that a small number of documents were corrupted during the imaging process. To ensure the integrity of the documents provided through the system, we are re-imaging all the documents. The database is now 60 percent complete and we expect to have it re-populated by Monday, May 23. If you downloaded documents from May 16 to May 18, we recommend that you return to the database and retrieve them again.