Close Close
ThinkAdvisor

Regulation and Compliance > State Regulation > NASAA

NASAA Wants to Rein in Advisors Who Fail to Pay Arb Awards

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Rules would make it an unethical business practice not to pay arb awards or fines.
  • Financial professionals would be required to meet their regulatory obligations under the rules.
  • Model rules add provisions to existing rules on dishonest or unethical business practices.

The North American Securities Administrators Association released for public comment Tuesday proposed model rules regarding unpaid arbitration awards and regulatory fines.

If adopted by NASAA members, the rules would make it an unethical business practice for a broker-dealer, agent, investment advisor or investment advisor rep registered in a jurisdiction to fail to pay an arbitration award or fine.

Melanie Senter Lubin, NASAA president and Maryland Securities Commissioner, said in a statement that the model rule “would require financial professionals to meet their regulatory obligations including payment of arbitration awards and sanction those applicants or registrants who fail to fulfill those obligations.”

If adopted, the model rules could prompt enforcement actions by NASAA members against violators, including revoking their license, the group said.

Specifically, the model rules would add the following provisions to the existing rules on dishonest or unethical business practices by broker-dealers, agents, investment advisors and investment advisor reps:

• Failing to satisfy an arbitration award resulting from a client or customer-initiated arbitration,

• Attempting to avoid payment of any client or customer-initiated arbitration; or

• Failing to satisfy the terms of any order resulting from a regulatory action taken against the registrant.

NASAA says comments on the proposed Model Rules should be submitted by Nov. 4, via email and sent to [email protected], along with (by cc:) [email protected], [email protected] and [email protected]