Alert February 01, 2011

SEC Publishes Study on Investor Access to Registration Information about Investment Advisers and Broker-Dealers

The Staff of the Office of Investor Education and Advocacy of the SEC (“OIEA”) published its “Study and Recommendations on Improved Investor Access to Registration Information About Investment Advisers and Broker-Dealers” (the “Study”).  The Study was required by Section 919B of the Dodd-Frank Act, which directed the SEC to recommend ways to improve investor access to registration information about registered and previously registered investment advisers, brokers and dealers and their respective associated persons, and to identify additional information that should be made publicly available.  The SEC is required to implement any recommendations within eighteen months of completing the study.

Conclusions.  OIEA identified various types of information it believed to be important to investors, some, but not all, of which are currently available on BrokerCheck, for broker‑dealers, or the Investment Adviser Public Disclosure (“IAPD”) section of the SEC website, for federal and state registered investment advisers.

OIEA noted that a single source of registration information regarding broker-dealers, investment advisers and their associated persons did not exist and that this was a reflection of the fact that two different regulatory regimes existed, each with its own separate registration system.  As it had been tasked to do, OIEA considered the advantages and disadvantages of further centralizing the BrokerCheck and IAPD systems.  Having acknowledged that currently a significant amount of registration information is publicly available, OIEA concluded that the primary advantage of a unified system would be the ability to provide investors with access to relevant data through a single request.  OIEA determined that a unified public disclosure database would be the optimal method for achieving such a goal, but cited practical difficulties of a complete structural overhaul in the allotted eighteen months as its reason for developing near-term and intermediate-term recommendations. 

Recommendations.  OIEA’s near-term recommendations include:

  • unifying BrokerCheck and IAPD search results;
  • adding a ZIP code search or other indicator of location function to BrokerCheck and IAPD; and
  • adding educational content to BrokerCheck and IAPD.

OIEA’s intermediate-term recommendations include:

  • analyzing the feasibility and advisability of expanding BrokerCheck to include information currently available in the Central Registration Depository; and
  • continuing to evaluate the expansion of IAPD content, as well as the method and format of publishing such content.