Back to: ECONOMICS, FINANCE, & ACCOUNTING
Central Registration Depository Definition
The Central Registration Depository, referred to as CRD, is an information hub for organizations and persons working in the US securities sector. FINRA regulates and manages the functioning of the CRD. It collects data related to securities registered in the market as well as brokerage organizations. Besides, it includes information of individuals who offer consultation services to investors regarding financial and investment matters. Information included in the CRD helps in running a background check for brokers and financial consultants.
A Little More on What is the Central Registration Depository
FINRA Broker Check makes use of the information stored in the CRD. It offers background data on brokers and registrants in the stock market. Also, investors can have access to such crucial information from the State Securities Regulatory Agency or by visiting the official website of the Association of Securities Managers of North America, Inc.
The information associated with brokerage organizations that BrokerCheck offers to investors includes an insight about the report and organization’s overview, the profile of the organization’s property, historical background of the company, mergers and acquisitions that the company was involved in, organizational operations, licenses held by the firm, nature of operations accomplished, and governmental action recorded in the official documents of the company.
BrokerCheck offers this information related to individual intermediaries:
- Summary document of the broker’s analysis
- Qualifications that the intermediary has including his or her records or licenses held, and sector reviews that the intermediary has given approval to.
- Past employment records for the last decade, involving the internal and external aspects of the securities market, provided by the intermediary
- Consumer issues recorded in the file of the mediator
Central Registration Depository is a safe mechanism created for sanctioned users to have access to utilize the official website of the Central Registration Depository.
References for the Central Registration Depository
Academic Research for Central Registration Depository
Using relational knowledge discovery to prevent securities fraud, Neville, J., Şimşek, Ö., Jensen, D., Komoroske, J., Palmer, K., & Goldberg, H. (2005, August). In Proceedings of the eleventh ACM SIGKDD international conference on Knowledge discovery in data mining (pp. 449-458). ACM. The authors explain how to apply the relational knowledge discovery in the main regulatory mission of the NASD (National Association of Securities Dealers). It is the largest private sector securities regulatory body that controls the misconducts in securities brokers. The objective of this paper is to emphasize on the limited regulatory resources of NASD on those brokers who involve in securities violation. The authors develop models with the help of empirical relational learning algorithms. This model ranks brokers according to the probability of committing securities serious violation in the upcoming years. The findings are that the model predictions highly correlate with the subjective inspections of NASD examiners.
Relational data pre-processing techniques for improved securities fraud detection, Fast, A., Friedland, L., Maier, M., Taylor, B., Jensen, D., Goldberg, H. G., & Komoroske, J. (2007, August). In Proceedings of the 13th ACM SIGKDD international conference on Knowledge discovery and data mining (pp. 941-949). ACM. Commercial datasets are mostly large, dynamic and relational. They consist of several records of persons, things, places, interactions and events. These are rarely structured properly for knowledge discovery and the meaning of their variables mostly change in different subsets. The authors explain these challenges accepted by NASD. They mention many methods for data preprocessing and apply techniques of link formation and known consolidation to connect individuals to branch offices. Lastly, they use normalization techniques to make a proper class label and show how these techniques provide an important base for learning empirical models of fraudulent activity.
Reflections on Dual Regulation of Securities: A Case for Reallocation of Regulatory Responsibilities, Warren III, M. G. (2000). Wash. ULQ, 78, 497. This paper discusses the state regulatory authority given the National Securities Markets Improvement Act of 1996 (NSMIA). This article suggests important changes in the regulatory role of the states, including state withdrawal from the process of registration. Such corollary civil remedies should be adopted to guarantee the new regime private reinforcement. This reallocation of regulatory obligation will definitely realign the securities regulation dual system to achieve the objective of NSMIA related to regulatory uniformity in a better way. It acts as the Uniform Securities Act statutory policy interpreted with the laws of federal securities.
Beyond prediction: Directions for probabilistic and relational learning, Jensen, D. D. (2007, June). In International Conference on Inductive Logic Programming (pp. 4-21). Springer, Berlin, Heidelberg. In the last decades, the research on learning probabilistic and logical models has highly evolved addressing the machine learning phenomena. Current research is an extension of these boundaries even more with the unification of these 2 strong learning frameworks. However, new research is going on. Present techniques are only a way of learning a knowledge subset required by the practitioners in significant domains. A further merger of logical and probabilistic models enable the researchers to create thorough knowledge required in a number of applications.
An overview of data mining for combating crime, Nissan, E. (2012). Applied Artificial Intelligence, 26(8), 760-786. Law and AI (Artificial Intelligence) have been growing subjects since the 1980s. But after 2000, the reasoning models related to legal evidence, prominently, began to feature. As far as data mining is concerned, legislators have been applying it to law enforcement and legal databases. The author makes a survey of data mining forensic apps to detect fraud and investigate crime intelligence. Conventionally, a new domain other than the Law and AI is going to be introduced. In the detection of frauds and unravelling networks, the professionals have achieved success, to a great extent.
The Expungement of Customer Complaint CRD Information Following the Settlement of a FINRA Arbitration, Lipner, S. E. (2013). Fordham J. Corp. & Fin. L., 19, 57. The FINRA (Financial Industry Regulatory Association) manages a customer complaints database about individuals the FINRA licenses as registered representatives. The securities regulators, as well as the investing public, have a right to use and access data to search for the customer complaints history of the registered representatives. However, using an arbitration process introduced by FINRA, the customer complaints records can be removed from the database. This paper tracks that past arbitration process and emphasizes on how to employ it in circumstances in which someone paid the investor to settle a claim. FINRA should make changes to the process of expungement in order to maintain its integrity.
Legal entity identifier: What else do you need to know?, Powell, L. F., Montoya, M., & Shuvalov, E. (2011). The DFSR (Dodd-Frank Wall Street Reform) and CPA (Consumer Protection Act) started a discussion on making a systematic code which recognizes an entity uniquely. This code is generally known as an LEI (Legal Entity Identifier). The data collected to describe this identifier plays a vital role in increasing the LEI usefulness. This article explores data called the reference data generally used in datasets which specify entities and test the usefulness of its elements to identify an entity uniquely and to check the underlying systematic risk in the financial sector.
Creating a linchpin for financial data: The need for a legal entity identifier, Bottega, J. A., & Powell, L. F. (2010). Data and information are the main powers of the financial sector. Many government agencies, semi-government and quasi-government agencies and the private companies as well are involved in the collection, processing, use and distribution of data. Of course, the data domain varies dramatically with respect to the nature of agency and use of data, e.g. balance sheets. Still, a standard to distinguish each entity does not exist In the financial industry. The social security number (SSN) identifies the individuals and companies even having the same name, separately. Many private firms have proprietary identifiers but none of them is used on a universal level.
What You Do Not Know Can Hurt You: How the FINRA Expungement Process is Endangering Future Investors through a Lack of Information, Farris, J. T. (2013). Hofstra L. Rev., 42, 1227. This paper elaborates the ways, the expungement process of the United States FINRA (Financial Industry Regulatory Association) endangers the upcoming investors due to lack of information sharing. It discusses the laws related to the securities industry of the nation and the legal responsibilities of brokers. It mentions an online database of FINRA’s Brokercheck with the efforts for the investors’ protection from fraudulent brokers. The author also evaluates the government agency rules of the United States.
Data mining applications for fraud detection in securities market, Golmohammadi, K., & Zaiane, O. R. (2012, August). In Intelligence and Security Informatics Conference (EISIC), 2012 European (pp. 107-114). IEEE. This study makes an analysis of the fraud detection techniques in the securities market and the relevant methods of data mining to tackle this issue. The authors specify the best practices on the basis of data mining techniques to detect famous fraudulent patterns and discover new predatory policies. In addition, the authors throw light on the challenges encountered in the progress and implementation of systems of data mining to detect manipulation in the securities market. Finally, the authors give recommendations for future work related to this research keeping in view all these important points.
Securities Central Registration Depository, Poythress, D. B. (1981). Ga. St. BJ, 18, 47. This paper provides detailed information about the CRD (Central Registration Depository) and its activities. It is basically a database that FINRA (Financial Industry Regulatory Association) maintains for all individuals and companies related to the United States securities industry. The author investigates how it saves and maintains data on broker firms and registered securities, also the individuals who administer financial and investment-related advice.