The proposal also clarifies that a customer may request default proceedings against an associated person regardless of how long the person has been terminated.

Edwards said the change “represents a modest improvement because it will permit some additional customer claimants to pursue default proceedings against inactive associated persons in circumstances in which this remedy is currently unavailable.”

Still, he asserted, the changes are “insufficient to remedy the longstanding problem of unpaid arbitration awards, which disproportionately involve customer claims against inactive Finra members and associated persons,” Edwards added. 

While reps and brokers may “reap enormous commissions from selling unregistered products such as private placements under Regulation D, and distribute the profits to shareholders, stand ready to close their doors and thumb their noses at aggrieved customer claimants when a financial product that they have been selling turns out to be part of a fraudulent scheme,” he said.

PIABA continues to urge FINRA to establish a national investor recovery pool.

“While PIABA supports every measure taken to address the serious unpaid award problem, we reiterate our concern that FINRA’s current proposal will not address in a meaningful way the millions of dollars of in unpaid awards that make a mockery of FINRA arbitration as a means of recovering investor losses. It is critical that FINRA stop delaying and institute a real cure to the problem: a national investor recovery pool,” Edwards concluded.

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