FINRA Rule 4111: Is your Brokerage Firm on the Naughty List?
The Financial Industry Regulatory Authority (FINRA) is planning to implement its new Rule 4111 with June 1, 2022 as the first evaluation date. The rule was created to address brokerage firms with a significant history of misconduct.
The annual process will be based on the number of risk-related disclosures a firm has compared to similar sized firms. According to FINRA, it will rely on information publicly posted on FINRA BrokerCheck to evaluate the firms.
Investors can also do their own background check on their broker or financial advisor and their brokerage firm by using FINRA BrokerCheck. It’s easy to use and you can find information such investor complaints, judgment/liens, and employment separations, among others.
Once a firm is identified as a “Restricted Firm”, Rule 4111 will require the firm to deposit cash or qualified securities in a segregated, restricted account to cover potential arbitration awards.
The rule will also give the regulator the ability to take proactive action against firms before more problems arise since without Rule 4111, the regulator can only bring enforcement actions and seek restitution after the customer harm has occurred. Investor advocates have apparently raised concerns for years about the issue of arbitration awards that go unpaid to harmed investors when a firm goes out of business.
Free Consultation with a FINRA Attorney
If you are concerned about your investments with your broker or financial advisor, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free, no risk consultation.
FINRA provides an arbitration forum for investors to resolve disputes. The White Law Group represents investors in FINRA arbitration claims throughout the country. Visit the firm’s homepage to learn more about the firm’s representation of investors.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.
Tags: FINRA attorney, FINRA lawyer, FINRA rule 4111, Securities Attorney Last modified: March 11, 2022