Cannot Pay a FINRA Arbitration Award: The Great, The Bad and The Ugly

The repercussions to a Financial Industry Regulatory Authority (FINRA) signed up an agent for not paying a negative arbitration award can be career-threatening. FINRA is empowered to suspend from its association any agent who cannot pay an arbitration award till it is paid. Regardless of this extreme effect, non-payment of arbitration awards is a substantial on-going issue for FINRA. Therefore, at its July 18, 2017, Board of Governors meeting, FINRA’s Board licensed brand-new guidelines to treat the issue. Find more info on

The Board authorized the publication of a Regulatory Notice obtaining talk about proposed modifications to FINRA’s Membership Application Program guidelines to offer FINRA staff with rule-based authority to presumptively reject a brand-new subscription application if the candidate or its associated individuals go through pending arbitration claims. In addition, the proposed changes would need a member company to look for a materiality assessment with FINRA if the member is not otherwise needed to submit a continuing subscription application and the member is looking for to affect a business growth or possession transfer and the member or an associated person has a considerable level of pending arbitration claims, an unsettled arbitration award or an overdue settlement connected to an arbitration. (As of the date of this short article the Regulatory Notice detailed above has not been released.).

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