the North American Association of Securities Administrators indicates that its members have approved a model rule aimed at companies and individuals who do not pay arbitration awards or regulatory fines.
The rule, proposed by Nasaa in October, adds several provisions to what is characterized as “dishonest or unethical business practices” among investment advisers, brokers, agents and representatives of investment advisers, such as noted.
The model rule makes it unethical or dishonest for an entity not to pay for investments related to the customer initiative Financial Sector Regulatory Authority arbitration awards or satisfy orders resulting from regulatory actions, such as the payment of fines, restitution orders or other monetary penalties.
The rule provides ways to avoid “licensing actions” through alternative payment terms, according to Nasaa.
It also serves as an “additional basis for enforcement action,” the association said.
“This rule is another tool to help states contribute to efforts to ensure victims get the compensation they deserve,” Brett OlinNasaa Broker Section Committee Vice Chairman and Chief Enforcement Officer, Nevada Securities Divisionsaid in a statement.
Nasaa members now have the ability to adopt the model rule in their own jurisdictions, according to the association.
Unpaid arbitration awards have been a focus of concern for regulators and investor protection groups in recent years.
the Public Investors Advocate Bar Association found that 24% of the money awarded by arbitrators in 2020 remained unpaid through September 2021, as reported. The organization called for the Security and Exchange Commission order Finra set up a national investor recovery pool to cover unpaid Finra premiums.
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