On May 14, Professor Christine Lazaro published an op-ed in the Investment News about a recent FINRA rule proposal calling for increased regulation of high-risk firms, entitled “Finra proposal to restrict recidivist behavior a good start — but more needs to be done.”
Here is an excerpt:
More still needs to be done to protect investors. Even though firms provide advice about investors’ retirement and life savings, there is little protection for investors if the advice is bad, or even fraudulent.
In the event of a product failure, or concentrated misconduct, firms simply cannot make investors whole and a restricted fund will not last long enough to pay a string of arbitration awards resulting from the misconduct. Troubled firms will remain more likely to shut down, leaving investors with no recourse, with the key people simply moving on to new firms.
Finra must do more to ensure that firms, and those in charge of the firms, are held accountable when their brokers go astray. While this proposal is a welcome step in the right direction, until Finra defines “accountability” to mean protecting investors and making them whole, investors will not be fully protected.
Professor Lazaro also provided written testimony on behalf of PIABA to the House Financial Services Committee subcommittee on Investor Protection, Entrepreneurship and Capital Markets Committee for two recent hearings. For the March 14, 2019 hearing, “Putting Investors First? Examining the SEC’s Best Interest Rule,” Professor Lazaro submitted a Statement for the Record discussing the SEC’s proposed Regulation BI and needed improvements to the regulation. For the April 3, 2019 hearing, “Putting Investors First: Reviewing Proposals to Hold Executives Accountable,” Professor Lazaro submitted a Statement for the Record discussing the issue of mandatory arbitration clauses contained within contracts between investors and brokerage firms.
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