01.03.22
FINRA Rule to Rein In Rogue Brokers Goes Into Force
by: Mark Schoeff Jr.
Effective January 1 is a new FINRA rule authorizing the regulator to impose additional capital mandates and other conditions on brokerages that employ a high number of registered representatives with significant disciplinary histories. FINRA can now require a "restricted firm" to deposit cash or qualified securities in segregated, restricted accounts managed by the agency, for funding arbitration awards and other purposes. FINRA will make a yearly determination of which brokerages pose elevated investor-protection risks, based on criteria including the number of firm-level and individual-level regulatory disclosures. "FINRA believes that the direct financial impact of a restricted deposit is likely to change such member firms' behavior — and therefore protect investors," the agency stated.
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