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Finra Wants to Go Harder on Bad Brokers

May 15, 2017

Finra will tighten scrutiny of brokers with disciplinary records and the firms that employ them, according to a press release from the regulator.

The industry’s self-funded watchdog plans to seek comment on several proposals to boost its oversight of high-risk brokers, including enhanced examinations, monitoring and disciplinary actions, according to the press release. This includes allowing adjudicators to impose tougher sanctions on brokers with past disclosures and letting Finra panels put limits on the activities of brokers and companies undergoing appeals related to disciplinary matters, the regulator says.

In addition, Finra will roll out a regulatory notice requiring advice firms to beef up supervision of brokers when Finra reviews statutory disqualification requests or the broker is appealing the decision of a Finra panel, according to the press release.

The regulator will also propose raising the fee for statutory disqualification applications as well as introduce a new fee for companies when Finra screens such applications, the regulator says.

Further, Finra will propose requiring mandatory BrokerCheck disclosures on firms that are required to record phone calls with clients due to their employing a high percentage of brokers previously employed by firms with disciplinary records, according to the press release.

In addition, Finra plans to revamp guidelines on exam waivers to take into account a broker’s history of misconduct, settlements and arbitration awards, the regulator says.

By Alex Padalka