FINRA’s policies soft on brokers: Investor advocate Lipner reacts with NYT
The Financial Industry Regulatory Authority (FINRA), an independent regulator of security firms in the United States, purports itself to protect investors and market integrity, according to their website.
However, the organization has been under ongoing media scrutiny for its soft reactions to complaints against brokers.
Seth Lipner, lead author of the Securities Arbitration Desk Reference at Thomson Reuters and professor of law at Baruch College, is an active advocate for investor protection and regularly defends investors in cases against brokers. His experience with this topic is shared in an article from the New York Times, where he discusses FINRA’s biggest problems.
Lipner conducted an extensive analysis of 150 arbitration awards containing requests from brokers to purge negative information from their FINRA accounts in cases where a settlement had been reached before a hearing. He found that all but five of these awards were granted, which is consistent with suspicions that the FINRA arbitration rules make it too easy for brokers to “purchase” clean records by offering substantial settlements to a customer in return for quiet expungement requests.
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