Richard A Comment On Regulatory Notice 26-06

To Whom It May Concern:

I respectfully urge FINRA to reconsider the current policy requiring publication of customer complaints regardless of merit, validation, or regulatory finding.

My concern is not abstract. It arises from direct experience.

Several years ago, a client complaint was filed against me regarding an annuity recommendation. My broker-dealer — a firm known for conservative compliance standards — conducted a review at the time of the complaint and formally concluded there was no suitability violation, no misconduct, and no basis for disciplinary action. The case was closed.

Importantly, the complaint arose during a period in which the client was experiencing serious personal instability, including alcohol-related behavioral issues that were acknowledged by members of her own family and that materially affected her conduct and judgment. Those circumstances contributed significantly to the deterioration of the advisory relationship.

Despite this context — and despite the absence of any regulatory finding — the complaint entered the disclosure system.

Years later, as part of a broad supervisory settlement involving firm-level oversight matters unrelated to my individual conduct, my Form U4 was retroactively marked.

There was:

• No arbitration award
• No customer restitution
• No disciplinary action against me
• No adjudicated finding of wrongdoing

Yet the public disclosure conveys none of that nuance.

Under the current framework, an allegation — even one investigated and closed without action — is permanently visible. The system does not meaningfully distinguish between:

• Allegation
• Allegation closed without finding
• Proven misconduct

Nor does it account for contextual factors such as client instability, impaired judgment, or acknowledged behavioral issues.

The structural imbalance is significant:

• A complaint requires no proof to be published.

• The advisor must bear substantial cost (often $25,000 or more) to pursue expungement or appeal.

• There is no automatic review tied to absence of sanction.

• Retroactive disclosure can occur years later, even where no individual wrongdoing was found.

In practice, this means that a professional record can be permanently affected by an allegation arising from circumstances in which client behavior — not advisor misconduct — was the driving factor.

The long-term professional impact of such disclosures is profound. In my case, despite years of serving clients in good faith and in what I believed to be their best interest, I ultimately left the business of managing money. The regulatory exposure associated with unproven allegations became disproportionate to the risk-reward balance of continuing in that capacity.

Transparency is essential. But transparency without proportionality undermines fairness.

I respectfully suggest FINRA consider reforms including:

1. Establishing a publication threshold tied to regulatory findings, arbitration awards, restitution, or individual sanctions.
2. Clearly distinguishing between “Allegation – No Finding” and “Adjudicated Misconduct” in public records.
3. Creating a lower-cost administrative review pathway for complaints closed without action.
4. Limiting retroactive markings absent individual findings of wrongdoing.
5. Allowing contextual disclosures where client impairment or acknowledged instability materially affected the complaint.

Investor protection and procedural fairness are not mutually exclusive. A regulatory framework that treats unproven allegations as equivalent to proven misconduct risks undermining both.

Thank you for inviting public comment on this important issue.

Respectfully,

Richard A, CFP®