Senate and House lawmakers pressed Finra Thursday on the fairness of the broker-dealer regulator’s arbitration system following a recent court ruling in which a judge asserted the forum was biased against an investor claimant.
Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif., sent a letter to Finra Chief Executive Robert W. Cook citing the decision by Georgia Superior Court Judge Belinda E. Edwards to vacate an arbitration claim that Wells Fargo won in 2019 against a customer who accused the firm of mismanaging his account.
In her decision, Judge Edwards said Finra allowed Wells Fargo to strike certain arbitrators from the roster of those available to hear the case, undermining the neutrality of the arbitration forum. Finra said there was no agreement regarding the appointment of arbitrators.
The judge’s ruling raised Warren’s ire. She had written to Cook last year following the GameStop trading frenzy, and in his response to one of her questions, he assured her of the fairness of the arbitration system administered by the broker-dealer self-regulator.
“These findings by a federal judge in the Wells Fargo case raise serious questions about your assertions that the Finra arbitration process is ‘neutral, efficient and fair,’ and about whether Wells Fargo has once again sought to undermine consumer protection rules,” Warren and Porter wrote.
They posed several questions for Cook to answering, zeroing in on the details about how arbitrators were chosen for the Wells Fargo case and whether the firm talked to Finra officials about their selection.
“Finra takes this issue very seriously,” Finra spokesperson Michelle Ong said in a statement. “We are reviewing the letter and look forward to responding appropriately.”
The controversy over the Wells Fargo arbitration case was a trifecta for Warren. She’s been a longtime critic of Wells Fargo and Finra, as well as of the broker-dealer self-regulator's arbitration system.
“This latest report brings all three problems into focus: it reveals troubling new allegations about the atrocious behavior of Wells Fargo, the inability of FINRA to effectively police the financial system, and the unfairness of the arbitration process,” Warren and Porter wrote.
Supervision vice chair speaks following recent launch of AI adoption practices by regulators.
In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.
Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.
Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.
Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
