BrokerCheck is a publicly available tool that FINRA offers for the public to learn about member-firms and their registered representatives.  Over the years, the information available to the public has expanded.  The fallout from the financial crisis has resulted in more and more information being made available to the public, with additional categories of information being made available by July 2012.  Now, FINRA is seeking public comment for the release of reasons for termination and scores from industry qualifying examinations, but there is a potential unappreciated downside to the release of this information.

 Making information available to the public about a registered representative’s reason for termination can be seen as another way to smoke out those individuals who should not be in the industry in the first place.  This disclosure will provide the public greater protection against rogue brokers fleeing one firm for another.

 One commentator has noted that there is a downside from the dissemination of all this information; namely, identity theft.  The more and more personal information that becomes available, the more likely for there to be identity theft.  In light of the SEC’s recent alert on investment scams through social media, FINRA may be inadvertently helping the promulgation of such scams.

 In the end, I suspect that the reasons for termination and test scores will become available through BrokerCheck.  As such, member-firms and registered representatives will have to be even more diligent to ensure that they are not subject to the improper use of this information.  One potential tool is the frequents internet searching of the names of registered representatives to test for improper use, but this will come at a cost in time and resources.  Similarly, FINRA will have to critically review instances of purported financial fraud to ensure that the perpetrator is who the public thinks she or he is.  Otherwise, BrokerCheck will become a tool for fraudsters as opposed to protecting the public.