Finra publishes list of brokers, firms responsible for unpaid arbitration

Group hopes it will make information more transparent and accessible for investors

Dec 4, 2018 @ 5:03 pm

By Ryan W. Neal

It's only three weeks until Christmas, but the Financial Industry Regulatory Authority Inc. is already showing who is on its naughty list.

Finra is publishing the names of every firm and individual responsible for unpaid customer arbitration awards in a single location on its website. The information will continue to appear on BrokerCheck reports, too, but Finra believes the new format will be more transparent and accessible to investors.

The list includes the names of firms and individuals whose Finra registration has been terminated, suspended, canceled or revoked, or who have been expelled from Finra. These firms and people failed to pay a monetary award within 30 days and then did not comply within 21 days after a follow-up notice.

Also included on Finra's list are firms and individuals who did not pay an arbitration award but cited bankruptcy as a defense.

Andrew Stoltmann, the immediate past president of the Public Investors Arbitration Bar Association, called this a good, if incremental, step for Finra to address the problem of unpaid arbitration.

"They say sunlight is the best disinfectant, and to the extent Finra is publicizing the names and the brokerage firms who have stiffed investors, that's certainly a good thing," Mr. Stoltmann said.

(More: SEC tests show investors don't understand disclosure form for brokers, advisers)

In a report released earlier this year, Finra revealed 2% of all customer cases resulted in unpaid awards. In 2016 for example, there were 2,457 arbitration cases involving a customer dispute. Three hundred eighty-nine of these closed by award, and 44 of those went unpaid.

The organization suspended 154 individuals from 2012 through 2016 for not paying.Unpaid arbitration awards from that time period ranged from $14 million in 2016 to $75 million in 2013.

Unpaid arbitration awards from that time period ranged from $14 million in 2016 to $75 million in 2013.

While Finra deserves credit for releasing numbers on the extent of the problem, the group still hasn't advocated for any solutions, Mr. Stoltmann said.

"It's nice that they are discussing it, but that doesn't solve the problem," he added.

Finra is getting more active on this topic because the U.S. Congress is threatening to solve the problem with legislation, Mr. Stoltmann said. Sen. Elizabeth Warren, D-Mass., proposed a bill in July requiring Finra to establish a fund using Finra proceeds to cover unpaid awards.

With the midterm elections swinging the House of Representatives back in favor of Democrats, passing a bill becomes more feasible, Mr. Stoltmann said.

Finra did respond to a request for a comment.


What do you think?

View comments

Most watched


Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.


Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print