Add racism to the list of serious allegations such as murder, harassment of women and child sexual assault that often are nowhere to be found on FINRA BrokerCheck.
One former LPL Financial advisor’s situation shows the inconsistencies in the disclosure database. LPL
Despite the fact that the circumstances of her departure from LPL made national news headlines, there’s no mention of them on her public record on BrokerCheck and the SEC’s Investment Adviser Public Disclosure website. Nothing there suggests LPL formally terminated her, unlike the many times it has attached official disclosures to the permanent records of departing representatives about allegations deemed to be related to investments, fraud, supervision or industry standards of conduct.
“BrokerCheck is following the same logic as our overall economy, which creates an artificial separation between finance and the rest of reality,” Rachel Robasciotti, CEO of socially responsible investment manager Adasina Social Capital, said in an email. “Traditional investing focuses exclusively on financial returns and ignores the impact of investments on people and the planet.”
“The BrokerCheck system that was designed to give prospective investors information about the ethical integrity of a financial advisor will tell you if someone shoplifted while in college, but may never disclose if they were dismissed in a situation where a serious injustice occurred,” she added. “This system, like so many others in financial services, seems to have a glaring blindspot.”
Robasciotti has led efforts aimed at shedding light in such areas, such as
Representatives for LPL didn’t respond to requests for comment.
Representatives for the SEC didn’t respond to an email seeking an interview or comment, while representatives for FINRA declined to make anyone available for an interview or discuss Cure’s case on the record. Representatives for the Texas State Securities Board didn’t respond to requests for comment or an interview.
The regulators themselves have called for further changes to the public databases after a number of disclosure-related issues during the past decade. At a panel last month, FINRA CEO Robert Cook and SEC Commissioner Allison Herren Lee called for consolidating the several different sites into more of
In an email interview, Cure said she had not “done anything illegal, nor have I done anything security-related.” At least eight of her employees resigned out of fear for their lives after Cure and her team received death threats, and about 200 clients with $26 million in assets have left the practice since the allegations first showed up on TikTok in August, according to Cure. While she didn’t provide any details about the Skype messages to her staff allegedly instructing them not to consider any Black people for the position, she said she’s “sensitive to the issues of minorities” as a woman in a predominantly male industry.
“I've been in business for 30 years and have hired people from every ethnic background and the LGBT groups — I am not the problem,” Cure said. “This ‘woke’ movement is evil and destructive and anyone can be a target of it. People believe what they see on social media, true or not.”
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“The decision for us is just facilitating transfer of assets,” Hanks said.
Regardless, two minor state-level cases leading to combined fines of $7,500 in 2016 and 2020 appear in Wealth Management’s SEC Form ADV Part 2 brochure, while there are no disclosures relating to Cure. Within 30 days of a rep ending her brokerage affiliation with any firm, the company must file
In general, if the firm answers “yes” in question No. 7F that the rep resigned voluntarily, got fired or was permitted to resign after allegations that they either violated investment, supervisory or fraud rules, there’s a BrokerCheck disclosure. Since Cure’s case didn’t involve allegations of fraud or supervisory failures in another rep’s case, LPL almost certainly answered “no” to all three, including the question of whether there were any allegations of “violating investment-related statutes, regulations, rules or industry standards of conduct.” In addition, the lack of disclosure means it’s much less likely that LPL could itself face a claim of defamation if Cure were to file a lawsuit or arbitration case against the brokerage.
Beyond the ongoing questions about BrokerCheck, Cure’s case displays the consequences of alleged racism, particularly in light of “the rise of social media and a generation of diverse employees and clients dedicated to equity and inclusion,” Robasciotti said. In addition, it shows that, while clients are definitely important, workplaces policies and practices are as well.
“If we don't have dedicated and capable staff, we have no ability to serve those clients,” Robasciotti said. “Increasingly clients are evaluating financial advisors on the diversity of their staff. If you're losing your staff, and especially the women and people of color who work for you, you become less attractive and able to serve the next generation of clients.”
