Senator Warren wants to make FINRA Accountable for Unpaid Arbitration Awards
According to reports, Senator Elizabeth Warren (D – Mass.) recently introduced legislation that would require the Financial Industry Regulatory Authority (FINRA) to create a pool to cover unpaid FINRA awards using money collected from penalties FINRA collects from its member firms.
FINRA is an independent, non-governmental regulator for all securities firms doing business with the public in the United States. Their mission is to protect investors by regulating brokers and brokerage firms and monitoring trading on U.S. stock markets.
The senator’s Compensation for Cheated Investors Act also proposes requiring FINRA to track whether the awards are paid out, according to reports. Warren reportedly recommends that FINRA use its existing authority to ensure the unpaid arbitration awards reach their intended recipients.
“FINRA has the authority to make sure defrauded investors don’t get stiffed — and this bill will make sure it uses it,” she says, according to an article in ThinkAdvisor.
In 2013 FINRA had more than $62 million in unpaid awards, according to a December 2015 report from the regulator’s own Dispute Resolution Task Force.
The Public Investors Arbitration Bar Association (PIABA) says almost a third of all awards weren’t paid in 2013, according to reports. PIABA also says unpaid awards amounted to $200 million in the period from 2012 through 2016, according to ThinkAdvisor.
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