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New CRD "Registration Comment" Section Allows Private Notes About Brokers
Brokerage firms now can add notes about brokers, according to NASDR, to "clarify or explain certain unusual circumstances in an individual's registration history", including any "irregularity". Broker advocates are concerned about the privacy of these notes - they are not available to the brokers (unless through the firm), to the public or to investors.
NASDR defends the note function by saying it is only temporary until new forms U-4 and U-5 can be amended to include an explanatory mechanism. NASDR also states that it does not consider such notes to be part of the broker's permanent file. But some state regulators disagree, and are taking the position that once entered, the notes are part of the state's permanent record.
Although transitional, the private note function is expected to be around for a considerable time.
Source: Registered Representative, October, 2000
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