SIFMA provides comments to the Department of Labor (DOL) on their proposed amendments to the “Investment Duties” regulation under Title…
November 4, 2021
Via E-Mail to [email protected]
North American Securities Adminstrators Association, Inc. (NASAA)
750 First Street, NE, Suite 1140
Washington DC 20002
Re: SIFMA comment re: NASAA’s Proposed Model Rule for Unpaid Arbitration Awards
Dear Sir / Madam:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on NASAA’s proposed model rules to address unpaid FINRA arbitration awards by broker-dealers and investment advisers (the “Model Rules”).2 The Model Rules would add the following provisions to the dishonest or unethical business practices of broker-dealers and investment advisers:
• Failing to satisfy an arbitration award resulting from a client or customer-initiated
• Attempting to avoid payment of any client or customer-initiated arbitration; and
• Failing to satisfy the terms of any order resulting from a regulatory action taken
against the registrant.
The Model Rules would thereby serve as the bases for enforcement actions related to unpaid awards and allow member jurisdictions to prevent the registration of firms and individuals with outstanding FINRA arbitration awards or other regulatory obligations.
The issue of unpaid FINRA arbitration awards is a legitimate concern that merits attention. SIFMA generally supports appropriately designed reforms intended to reduce the number of unpaid awards. Accordingly, we generally support NASAA’s Model Rules, with
recommendations to narrow them in certain respects, expand them in others, and clarify when and whether they apply, as set forth below.
1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate on legislation, regulation, and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 NASAA Proposed Model Rules for Unpaid Arbitration Awards (October 5, 2021), available at https://www.nasaa.org/wp-content/uploads/2021/10/Request-For-Public-Comment-Unpaid-Arbitration-Awards- Model-Rules.pdf.