FINRA building in New York. (Photo: Ron Pechtimaldjian)
Sen. Elizabeth Warren, D-Mass., introduced legislation Tuesday to require the Financial Industry Regulatory Authority to use its existing authority to compensate investors for unpaid arbitration awards.
The Compensation for Cheated Investors Act directs FINRA to establish a pool funded by penalties from broker-dealer members that will "pay unpaid final arbitration awards and require it to track whether future arbitration awards are paid."
Said Warren: "FINRA has the authority to make sure defrauded investors don't get stiffed — and this bill will make sure it uses it."
Unpaid arbitration awards "have cost ordinary investors hundreds of millions of dollars over the years," Warren continued. "FINRA is supposed to be looking out for them, not the brokers and dealers who cheat them."
FINRA and its predecessor self-regulatory organizations, Warren argued, "have let this problem continue for too long."
