NASAA backs FINRA proposal to incentivize payment of arb awards, offers improvements

By John M. Jascob, J.D., LL.M. NASAA has offered support for a FINRA proposal that would use FINRA’s Membership Application Program to incentivize the timely payment of arbitration awards. NASAA believes that the proposed rule amendments represent a positive step in addressing the problem of broker-dealers and associated persons who fail to comply with their regulatory and ethical obligations to satisfy arbitral awards against them. NASAA cautioned, however, that the amendments will not, by themselves, resolve this important investor protection concern. Accordingly, NASAA’s comment letter offered suggestions to strengthen the proposal while offering help in finding a solution that will ensure that no investor awards or settlements go unpaid. Amendments to Membership Application Program. As described in FINRA Regulatory Notice 18-06, the amendments would amend FINRA’s new and continuing member application processes to address situations in which a FINRA member…

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