James Dunlap, the founder and principal of James A Dunlap Jr & Associates, said he was moved to create BrokerCop.com after decades of representing clients in cases involving brokers who, he says, are protected from negative publicity by the existing US system for dealing with investor complaints.
Because legal cases are rarely publicised, it is difficult for would-be clients to find out whether a company they are thinking of investing through has ever been accused of malfeasance, Dunlap said.
“One of the biggest parts of my practice involves representing investors in arbitrations involving FINRA [the Financial Industry Regulatory Authority],” he told International Adviser.
“The only time a case is made public is when an award is made; 80% of cases are settled before this stage, making it difficult for investors to find out about a broker or promoter. That’s what I’m trying to organise here.”
Dunlap said he understood that some people could post untrue comments on the website in an effort, for example, to discredit rival firms, but he is adamant that “the free exchange of ideas is the only way to maximize investor protection”.
“The purpose of the site is to give investors a chance to get information about brokers and promoters before the damage is done.
“The site is gathering information on brokers, promoters, and investors from a range of sources, including investors themselves. The only thing we would post ourselves is verbatim information from FINRA, the Securities & Exchange Commission, the Federal Bureau of Investigation, and other government or SRO [self-regulating organisation] sources.
“If a criticism is unfair, let the marketplace of ideas fix it,” he said, adding that former US Supreme Court Justice Louis Brandeis once famously observed that "sunlight is the best disinfectant."
If a posting were challenged, “we might ask the poster for supporting information or we would consider removing it”, he added.
Dunlap said BrokerCop.com had only been up for about two weeks, so it was too early to tell how well it would work, but he did not rule out the possibility that it could include comments from non-US individuals about non-US firms.
Website power
Dunlap is not the first to see the potential in allowing people who feel let down by the system to share their experiences online.
Perhaps the best-known example of such a website is Tripadvisor.com, where people are invited to post reviews of their experiences with airlines, hotels, holiday rentals and restaurants.
Also said to be successful is ipaidabribe.com, a website launched in August 2010 in India by a non-profit organisation there called Janaagraha, which literally means “people power”.
According to the website itself, it has helped to generate the filing of more than 20,000 reports of bribes across 484 cities, and according to a BBC report last year, it has begun to change the country’s previously bribe-ridden culture. Space is given for people who wish to record cases of honest officials who do not take bribes and otherwise perform their jobs professionally.
"Do you think corruption is corroding our country?" ipaidabribe.com asks on its home page. "Your data will help to change the system. Your bribe story can help others. Act now!"
Last month, a similar website, Korupedia.com, was launched in Indonesia, receiving two million hits in its first week, according to a story on the Voice of America’s website, which noted that corruption scandals are currently commonplace in Indonesia.
