Senate Democrats want Finra to compensate investors who prevail in arbitration cases but are stiffed by the losing brokerage.
In a Senate Banking Committee markup of unrelated bills Thursday, Sen. Elizabeth Warren, D-Mass., offered an amendment that would direct Finra to create a fund that would cover unpaid arbitration awards. She later withdrew the measure, but she and fellow Democrats made clear they want the committee to consider legislation in the future.
She cited analyses that show that arbitration victors were unable to collect $62 million in awards in 2013, an amount that represented one quarter of all awards that year.
"We're talking about millions of dollars that rightly belong to working families," Ms. Warren said.
In a Senate Banking Committee hearing a year ago, Ms. Warren pressed then-Finra chairman and chief executive Rick Ketchum on unfulfilled arbitration awards.
"Finra has not taken any action to address this problem," she said.
Many brokers are "thinly capitalized," said Sen. Mark Warner, D-Va.
"They get into an arbitration, [then] they shut down and move," Mr. Warner said.
The most senior Democrat on the committee, Sen. Sherrod Brown, D-Ohio, also voiced support for arbitration legislation and called for a broader congressional review of the Financial Industry Regulatory Authority Inc., the broker-dealer self-regulator.
"The committee should consider additional oversight of Finra's work since they have fallen short," Mr. Brown said.
"Finra continues to be very concerned about awards to investors that go unpaid," Finra spokeswoman Nancy Condon said in a statement. "We have been taking a careful look at this issue and look forward to working with Congress to try to find a solution."
Finra runs the arbitration system that adjudicates disputes between customers and brokers as well as between brokers and financial firms.
The new chairman of the committee, Sen. Mike Crapo, R-Idaho, emphasized during Thursday's markup that he wants to work on legislation that draws bipartisan support. He told reporters after the meeting that he's not sure whether Finra reform falls into that category.
"I don't know because this is a new issue," Mr. Crapo said. "We will work to see if there can be bipartisan support. But I can't predict right now."
Mr. Crapo said that he does want to help investors obtain the money they win in arbitration cases.