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You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Securing a Finra arbitration award is one thing, collecting another

The federal securities watchdog Financial Industry Regulatory Authority's recent actions reveal the agency's concerns with the outcome of money recoveries it awards consumers in securities cases before FINRA arbitration panels.

What regulators are thinking is clear from key points stressed by the entity in a recently released discussion paper.

And that is this: There's a problem.

Specifically, regulatory officials have sounded warning bells regarding what happens in too many cases following a panel arbitration resulting in a damage award to a consumer wronged by an investment adviser or brokerage firm.

The bottom line, notes the agency, is that legions of those claimants are not collecting what has been awarded to them. Reportedly, a stunning one-fourth of all FINRA arbitration awards don't result in money actually collected by individuals and institutional investors that win their cases.

That obviously needs to change, and FINRA has put forth proposed rules that one financial news outlet states are "designed to create further incentives for the timely payment of awards." Those include the following amendments:

  • No adviser leaving a brokerage to avoid paying an award
  • Congressional or SEC mandate that firms carry insurance adequate to always pay damages
  • Disclosure requirements by firms with unpaid claims
  • Enhanced public transparency regarding the arbitration process and recovery avenues

Concerning the latter bullet point, aggrieved investors might reasonably want to consider working with a proven securities law attorney commanding broad experience representing clients before FINRA panels and in courtroom litigation. A tested advocate can aggressively pursue a claim and help an investor follow through when an effort to recover is required.

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