My Request to FINRA: Make financial services safer for women

A version of this article first appeared in Financial Planning magazine on January 27, 2020.

The stories that landed in my inbox were horrifying and disturbing. Last March, I asked women in finance to send me their personal experiences with sexual harassment and discrimination. Examples of pay inequity, unwanted touching, vile comments, and even rape flooded my inbox. I relayed many of these stories in my Do Better series, which I published from October to December of last year.

What bothers me as much as each individual story is the lack of industry will to take substantive measures — beyond diversity statements and conferences — to address harassment and discrimination. Real progress will come when we rally to change the systems that underpin inequity and protect abusers.

Two changes could create the groundswell needed.

First: End forced arbitration in employment contracts for cases of sexual harassment or discrimination. The organization Force the Issue provides excellent resources in this area.

Second: Our industry must treat harassment and discrimination issues with the same gravity as financial crimes. FINRA can play a leadership role in this movement by updating its regulations to mandate disclosure of sexual harassment and discrimination arbitrations, rulings or settlements on both the U4 and BrokerCheck.

Currently, FINRA does not require disclosure of harassment or discrimination rulings because those topic don't fall under the required disclosure categories of customer complaints, investment or financial related criminal convictions or no contest filings,regulatory rules violations or bankruptcy.

FINRA’s current reasoning in limiting disclosures is that they only require disclosure of topics that relate to investor protection. However, if a broker is harassing colleagues, is that not an indication of a breach of ethics? It is not a logical leap to imagine that someone who repeatedly harasses or discriminates against women in the office might also disrespect clients — particularly women clients.

People in a position of reviewing FINRA licensed professionals can search the FINRA arbitration database and do independent due diligence, though it’s not nearly as easy to read as BrokerCheck. Unsurprisingly, in some arbitration database cases that show rulings against harassing brokers (though not disclosed on BrokerCheck), BrokerCheck shows later regulatory and client complaint rulings. Two examples I’ve seen: a broker banned from practicing securities by a state, and another sentenced to 20-plus years in prison for fraud.

I suspect there's correlation between brokers who sexually harass their colleagues and brokers that commit ethical lapses when it comes to serving clients; but we can’t know for sure unless FINRA releases that data publicly. For a detailed and maddening view into some of these cases, read Susan Antilla's detailed reporting.

FINRA’s expansion of public disclosure parameters to include harassment and discrimination could protect clients from unethical or predatory brokers, increase the ethical health of hiring firms, and build a more inclusive industry. As a self-regulatory body, FINRA should add a mandate to foster a safe and inclusive industry for everyone who wants to work in a broker dealer. By not disclosing incidents and patterns of harassment and discrimination FINRA allows a serial harasser to move undetected from firm to firm, potentially harassing colleagues at each new place they work.

This secrecy endangers women and keeps them sidelined while harassers continue to move freely through their careers. At a time when many major organizations within financial services have initiatives to include more women in the profession, and FINRA’s own statements say that “diversity is a business imperative,” the regulator has a unique opportunity to advance real progress for women in finance.

FINRA can and should lead the way from a "boom-boom room" reputation and toward an investment services industry where all colleagues and clients are treated with respect.