In additional, all firms would also be prohibited from any direct or indirect acquisitions, transfers of a member’s assets or any asset, business or line of operation, if the firm or one or more associated persons have unpaid arbitration awards or settlements, unless the firm first seeks a material consultation with Finra’s MAP.
What is unique to arbitration against broker-dealers is that Finra suspends individuals and firms from the industry due to non-payment of a Finra arbitration award. “Unlike Finra member broker-dealers, however, investment advisors registered with the Securities and Exchange Commission (SEC) are not subject to disciplinary sanctions or suspension from the investment adviser industry if they do not timely pay arbitration awards assessed against the them,” Finra said.
Even if Finra suspends or bars a broker, however, the self-regulator said it “is not aware of any federal provisions that would prevent that individual from entering or continuing in another area of the financial services industry, including acting as an investment adviser.”
Finra is making data on unpaid customer arbitration awards for the past five years available on its website for the first time. The information is available here.