FINRA Calls Attention To Customer Recovery Issues

In a newly published paper, FINRA examined the issue of unpaid arbitration awards in the financial services industry and explored ways to improve outcomes for the FINRA arbitration forum.

Historically, FINRA has addressed unpaid arbitration awards through, among other actions, the suspension of member firms and individuals for non-payment. In this paper, FINRA identified additional steps that could be taken that would require action by the SEC or Congress. Those steps include:

• SEC rulemaking to require firms to maintain additional capital;
• Congressional legislation that would expand the scope of the Securities Investor Protection Corporation ("SIPC") to include unpaid customer arbitration awards;