Statement of Dissent to the Registration of Intermediaries Final Rule
Commissioner Scott D. O’Malia
August 17, 2012
I respectfully dissent with the Commodity Futures Trading Commission’s (“Commission”) final rule to adopt certain conforming amendments to part 3 of the Commission’s regulations regarding the registration of intermediaries.1 I find it disturbing that coming off of two widely publicized incidents of intermediary fraud and misappropriation of customer funds (i.e., MF Global Holdings and Peregrine Financial Group), the Commission is not adopting a rule that will provide customers with greater transparency of the professional and disciplinary background of Commission registrants. While I support most of what is included in this rule, I am unable to vote in the affirmative because of what has been excluded. The Commission indicates in the final rule that it will work with the National Futures Association (“NFA”) to increase transparency, but does not set forth any details describing how the Commission and NFA will accomplish that goal.
The Commission and NFA should follow the lead of the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) in terms of how professional and disciplinary background information is disclosed to the potential customers of SEC-registered broker-dealers. FINRA’s BrokerCheck®is a tool that provides potential customers with detailed information regarding the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment adviser firms and representatives.2 Through BrokerCheck®, these customers can research certain criminal matters, regulatory actions, civil judicial proceedings, and financial matters in which the broker-dealer, one of its control affiliates, or representatives has been involved.
Today’s futures markets need better technology solutions that will help futures customers make informed choices about the Commission-registered intermediaries with which they may wish to do business. Instead of promising to take action in the future, the Commission’s final rule should do everything it can right now to protect customer funds. I believe the final rule should enable the public to receive access to information about current and formerly registered intermediaries who may seek to attain positions of trust with potential futures customers.
1 See 17 CFR Part 3 (Registration).
2 For more information regarding BrokerCheck®, see http://www.finra.org/Investors/ToolsCalculators/BrokerCheck.
Last Updated: August 17, 2012