FINRA Instructs Adjudicators To Consider Arbitration History When Imposing Sanctions

In newly revised Sanction Guidelines, FINRA instructed adjudicators to consider a respondent's arbitration history when imposing sanctions in customer-initiated arbitrations.

Currently, the guidelines state that higher sanctions are triggered when a respondent's prior disciplinary actions are comparable to current misconduct, or demonstrate a pattern of "reckless disregard for regulatory requirements, investor protection, or market integrity." The revised guidelines replace the term "disciplinary history" with "Disciplinary and Arbitration History," which is defined as "disciplinary history by regulators, and arbitration awards and arbitration settlements resulting from disputes between a customer and the respondent[.]" Significantly, the expanded definition includes arbitrations when the respondent is "the subject of an arbitration claims that only names a FINRA member firm."