Regulatory Outlook | 05.27.20
FINRA Changes Membership Process to Curb the Ability to Sidestep Arbitration Awards
The SEC has approved rules for FINRA that will allow the agency to deny a new membership to a registered representative or a firm if the applicant has pending arbitration claims where there is a concern about payment of potential awards or settlements. The rules would also force companies with a large amount of unpaid arbitration awards to submit an application for continuing membership and be subject to increased oversight if they attempt to shift assets, management or owners to another firm and close down. The rules come after FINRA has struggled to ensure arbitration awards are paid to harmed investors. Congress and the Public Investors Arbitration Bar Association has also pressed the regulator on the issue.
Read the full article on InvestmentNews.