Investor plaintiffs’ attorneys want the brokerage industry to fund a restitution pool to make good on unpaid arbitration awards.

That was the main recommendation in a report released Thursday by the Public Investors Arbitration Bar Association, which claimed that one in every three arbitration awards made in 2013 went unpaid, amounting to almost a quarter of total damages awarded.

The plaintiffs’ lawyers group said a Finra-administered “national recovery pool” could be created by the SEC or Finra through rule-making. 

PIABA said a fee of just under $100 per registered rep would cover the $62.1 million that went unpaid from 2013.

“Finra itself is more than capable of funding the pool,” the report added, pointing out that Finra has paid rebates to member firms and has a $1.5 billion investment fund.

Funding the pool from investor fees would cost about 50 cents per customer, said the association.

“The cost is miniscule compared to the cost of protecting investors,” said PIABA president Hugh Berkson on a call with reporters Thursday.

Of course, with more money to pay awards, plaintiffs’ lawyers stand to get paid more as well.

But PIABA officials said many investors are denied justice because lawyers won’t bring cases if they know they won’t collect.

Requiring errors and omissions insurance won’t fix the problem because there are too many exclusions and limits on the coverage, the association said.

Broker-dealers are required to carry a fidelity bond, but not E&O coverage.

In 2014, Finra considered imposing an insurance requirement for payment of awards, but decided it would be too costly, according to a December 2015 Finra Dispute Resolution Task Force report.

The task force discussed whether to recommend reconsideration of an insurance requirement, and also explored the hiring of a consultant to review the feasibility of setting up an insurance fund, but reached no consensus, the report said.

Finra is “very concerned with awards to investors that go unpaid [and] continues to explore a number of solutions,” said the regulatory authority’s spokeswoman, Michelle Ong, in a statement.

“The reality is that problems with collection of judgments exist across all arbitration forums, government agency settlements and court orders,” Ong said.

Finra has leverage over currently registered people and dealers because it can suspend them if they fail to pay an award.

But that’s not the case for brokers or firms who leave the industry. Defunct firms are a source of many unpaid awards.

PIABA officials on Thursday claimed that Finra was hiding embarrassing statistics on unpaid awards.

“Clearly they have it,” Berkson said about the data, noting that a Wall Street Journal report Thursday cites Finra numbers through 2014.

The Journal reported that 15 percent of the $234.2 million in total arbitration awards made in 2014 remain unpaid, and that for the five years through 2014, 13 percent of awards haven’t been paid. (http://www.wsj.com/articles/personal-bankruptcy-can-protect-brokers-who-dont-pay-awards-1456376402)

Berkson, a Cleveland-based attorney at Hermann Cahn & Schneider LLP, said Finra refused to provide data to PIABA for analyzing 2013 awards.

“Why do reporters and lawyers have to work so hard to get what Finra won’t share?” Berkson asked.

(Correction: This article originally misstated the release date of the PIABA report and the day Hugh Berkson made his comments.)