Letters

Regulatory Notice 19-17 (Protecting Investors from Misconduct)

Summary

SIFMA sent comments to FINRA on Notice 19-17. The Proposal would impose tailored obligations, including financial set-asides, on designated member firms that cross specified, numeric disclosure-event thresholds. The stated purpose of the Proposal is to give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards. We respectfully submit the following comments and recommendations for your consideration.

SIFMA supports targeted efforts to ensure firms pay their arbitration awards in full. SIFMA applauds FINRA’s continuing efforts to help ensure that arbitration claims, awards, and settlements are paid in full. At the same time, we have been careful to explain that the issue of unpaid awards is not an indictment of the current securities arbitration system, or of the various processes currently available to help collect an arbitration award. Nor does it justify calls to create some form of post-award collection pool, insurance, or guaranty.

PDF

Submitted To

FINRA

Submitted By

SIFMA

Committee

Private Client & Wealth Management

Date

1

July

2019

Excerpt

Jennifer Piorko Mitchell
Office of the Corporate Secretary
FINRA
1735 K Street, NW
Washington, DC 20006-1506

Re: Regulatory Notice 19-17 (Protecting Investors from Misconduct)

Dear Ms. Mitchell:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on Notice 19-17 (the “Notice” or the “Proposal”).2 The Proposal would impose tailored obligations, including financial set-asides, on designated member firms that cross specified, numeric disclosure-event thresholds. The stated purpose of the Proposal is to give FINRA another tool to incentivize member firms to comply with regulatory requirements and to pay arbitration awards. We respectfully submit the following comments and recommendations for your consideration.

SIFMA supports targeted efforts to ensure firms pay their arbitration awards in full.

We applaud FINRA’s continuing efforts to help ensure that arbitration claims, awards, and settlements are paid in full. At the same time, we have been careful to explain that the issue of unpaid awards is not an indictment of the current securities arbitration system, or of the various processes currently available to help collect an arbitration award. Nor does it justify calls to create some form of post-award collection pool, insurance, or guaranty. Such a pool would be unfair and inappropriate because, among other things, it would essentially require the many good actors (firms who pay their awards) to pay for the few bad actors (firms who do not).

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