Brokers can keep home office addresses private, FINRA says

FINRA has quietly and quickly won approval for a rule that lets brokers keep their private addresses off the online BrokerCheck database with a simple check of a box.

With the lapse this year of an emergency rule adopted during the COVID-19 pandemic, many firms have been scrambling to register remote offices they opened in the past four years. That, in turn, has stoked anxieties that advisors' private home addresses will start appearing in the public online database known as BrokerCheck.

But many of those fears have been put to rest by a rule put forward on June 27 by the Financial Industry Regulatory Authority, the broker-dealer industry's self-regulator. Now firms can simply check a box on office-registration documents to keep their personal addresses out of the public eye.

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Usually when FINRA presents a rule for approval to the Securities and Exchange Commission, there follow months of comment submissions and responses before any official decision is made. This new rule, though, was adopted under an exclusion that allows proposals deemed "noncontroversial" by the SEC to take effect immediately.

Protecting vulnerable groups

Peggy Haslach, a financial planner at Cambridge Investment Research-affiliated Planning for Good, said the rule was a "no-brainer" that deserved expedited adoption. She said residential privacy is important for wealth managers seeking both to shield their business from scammers and protect their personal safety.

Haslach, who lives in the Seattle suburb of Sumner, Washington, said safety concerns run particularly high among advisors who specialize in working with certain minority groups. Haslach, for instance, mainly provides advice to members of the LGBTQ+ community.

"There's a lot of backlash against [diversity, equity and inclusion] initiatives and backlash against the LGBTQ community now," Haslach said. "I'm lucky I'm in the Seattle area, but I have friends in other areas who don't really want everyone knowing not only where they are but also who they live with."

Find it on BrokerCheck

FINRA's BrokerCheck database can be easily searched to learn about previous customer complaints, work history, disciplinary actions and similar matters for individual advisors. FINRA rules had already sought to protect brokers' privacy by excluding Social Security numbers, physical descriptions and other information collected purely for regulatory purposes.

Advisors have also long been able to check a box on office-registration forms to note that a particular location is a private residence. Safety and privacy only became a real concern with home offices when an emergency provision adopted during the pandemic came to an end on June 1. That provision had temporarily suspended firms' need to submit updated versions of Form BR, used to register home offices and other branch locations.

Besides advisors' safety, the new rule will help protect "digital privacy" by "excluding from public release on BrokerCheck a piece of personal information that has been linked to identity theft," according to FINRA.

Much to complain about?

Hugh Berkson, a partner at Cleveland-based McCarthy Lebit Crystal & Liffman and a former president of the Public Investors Advocate Bar Association, said there are good reasons for advisors to publicly report addresses for individual branch offices, rather than simply the location of their firm's headquarters.

"It's hard to just call Raymond James," Berkson said. "But if you have an office location, you can call that office and ask for the manager."

But as long as remote workers continue to list some sort of branch office where they can be reached, "I don't know if there is much to complain about," Berkson said. 

Joe Peiffer, the founding partner of Peiffer Wolf Carr Kane Conway & Wise and current president of PIABA, said he merely wants BrokerCheck to contain the types of information that can help investors select honest brokers, and "a home address isn't really one of them."

Pilot program

The push to exclude brokers' home addresses from BrokerCheck came amid extensive debate over how the industry can best accommodate the remote-work arrangements that became common during the pandemic. Following the lapse of its pandemic-related emergency rules, FINRA has said that firms that want to continue letting employees operate at a distance this year had to sign up for a three-year pilot program by June 26.

The program will allow FINRA and the SEC to gather data meant to show if firms can adequately supervise remote offices. Participating firms have to provide regulators with quarterly reports detailing the number of inspections they conduct of their branch offices. 

Any findings — such as regulatory breaches and remedial actions — then have to be reported to FINRA. The first submissions are due in October.

Firms that didn't sign up for the first phase of the pilot program — running from July 1 to Dec. 31 — have until Dec. 27 to sign up for the second. That phase will run for all of 2025.

Residential supervisory locations

Separately, FINRA has won approval for a new rule that will allow firms' supervisors to list their homes as "non-branch" locations that are now subject to internal inspections only once every three years. The previous requirement had called for annual reviews.

Employees in this new type of remote office — technically a residential supervisory location — are required to limit their work to supervisory activities. They can't hold their residences out to the public as a place of business or use it to meet clients or conduct most brokerage-related activities.

Speaking at FINRA's annual conference in Washington, D.C. last year, Chief Legal Officer Robert Colby said he's confident regulators have struck the right balance on remote work. 

"Some people have a burning need to be able to work from home and to be able to do their job from home," he said. "And we are convinced we have identified supervisory activities that can be done from home effectively."