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Written by 4:48 pm Current Investigations

Senate Democrats want FINRA to compensate investors


Senate Democrats pushing for  FINRA reform.

In a Senate Banking Committee markup of unrelated bills Thursday, Sen. Elizabeth Warren, D-Mass., offered an amendment that would direct the Financial Industry Regulatory Authority (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.

Sen. Elizabeth Warren says investors are being taken advantage of by brokerage firms. She cited a study that determined the industry failed to pay $62 million in claims in 2013.

In her argument, Warren 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 last year, Warren pressed former FINRA chairman and chief executive Rick Ketchum on unfulfilled arbitration awards. According to Warren, “Finra has not taken any action to address this problem.”

FINRA Arbitration Legislation

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 is the regulator 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, but that he does want to help investors obtain the money they win in arbitration cases.

This information is provided by The White Law Group, a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

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