If you answered in the affirmative, then you need to be aware of a recent FINRA proposal submitted to the SEC. The proposal would require member firms to take a harder look when they vet new hires.
About the rule, FINRA said that it “believes that the proposed rule change will streamline and clarify members’ obligations relating to background investigations, which will, in turn, improve members’ compliance efforts.” Under the new rule, member firms will have to conduct a more stringent review, forcing firms to conduct a search of public records.
So what should member firms do under this new rule? For one, you cannot simply rely on the CRD for information about your potential hire. Although this new rule may cause some strain for smaller firms, the new rule can be satisfied by some internet searches.
For example, a simple Google search of a name turns up unbelievable things. LinkedIn, Twitter and Facebook searches may also be useful tools. Likewise, there are ways to search your local state and federal court systems to see if your new hire has either sued or been sued.
There are also third-party services that you can use to perform these searches for you.
After some initial learning curves, I believe that the net result of the rule should lead to firms having a more robust hiring process and, in turn, avoid hiring those registered representatives who may have a history that you would not want to bring to the firm. Do your homework up front, and avoid problems later.
* photo from freedigitalphotos.net