By Alfred Villoch, III
The issue of unpaid arbitration awards issued by FINRA against FINRA registered representatives is a growing concern in the financial industry, and it has garnered attention from organizations like PIABA (Public Investors Advocate Bar Association). Many investors who have been wronged by FINRA registered stockbrokers rely on FINRA arbitration to seek restitution, but the enforcement of these awards can be problematic, especially when FINRA representatives refuse to pay them. To address this issue, one proposed solution is to mandate that all FINRA-registered individuals carry insurance as a safeguard against unpaid awards.
The concept of mandatory insurance for FINRA registered representatives has its merits, as it could potentially reduce the risk of investors being left without recourse. However, this solution isn’t without its complexities and potential downsides.