According to FINRA Disciplinary actions for November 2022, the following individuals were suspended from FINRA for failing to comply with a FINRA arbitration award or settlement agreement pursuant to FINRA rules:
|Carl Buhr||Wells Fargo Clearing Services, LLC|
|Neil Fineman||First Allied Securities, Inc.|
|Sagepoint Financial, Inc.|
|Donald Heitz||LPL Financial LLC|
|First Command Fianncial Planning, Inc.|
|Tim Leissner||Goldman, Sachs & Co.|
|Evan Schottenstein||J.P. Morgan Securities LLC|
|Bruce Smith||The Sports Advisory Group, LLC|
|UBS Financial Services Inc.|
|David Weigel||Weigel Fiduciary Aset Management LLC|
|RBC Capital Markets, LLC|
Brokers and brokerage firms are obligated to satisfy all FINRA arbitration judgements, without any unreasonable or unwarranted delay. FINRA Rule 9554 allows FINRA to ensure that brokers and brokerage firms comply with the terms of securities arbitration awards.
What Is FINRA Rule 9554?
Under FINRA’s securities industry regulations, arbitration awards must be paid within 30 days of the date that the award was granted. If a broker or brokerage firm fails to comply with this requirement, then industry regulators can use FINRA Rule 9554 to take immediate enforcement action against them.
FINRA Rule 9554 allows for expedited suspension or cancellation of membership of any party that fails to comply with a FINRA arbitration award. Specifically, regulators are empowered to send the violating party a 21-day written notice that their securities industry membership will be revoked if they do not rectify the problem.
What Defenses Do Brokers Have Against A FINRA Rule 9554 Action?
Brokerage firms and stockbroker primarily have four defenses to avoid expedited suspension under FINRA Rule 9554:
- They can prove that the arbitration award has actually already been paid in full;
- They can prove that they have reached a voluntary settlement on payment terms with the complaining customer;
- They can prove that they have taken further legal action, filing a claim to vacate or modify the award and that their motion to do so is still pending in the court; or
- They can prove that they have filed for bankruptcy or that this debt has already been discharged in bankruptcy.
- However, a financial advisor or brokerage firm cannot argue that they currently lack the “bona fide ability to pay”.
Rule 9554 is an important investor tool that helps maintain confidence in the securities arbitration process that claims will be satisfied. Unfortunately, many brokerage firms lack adequate insurance or are otherwise poorly capitalized and FINRA arbitration frequently exposes firms and individual financial advisors who fail to satisfy their financial obligations.
Securities Arbitration Claims Against Barred Brokers
Even after a broker is barred from the industry or otherwise faces disciplinary action, investors can still pursue stockbroker misconduct claims against their financial advisor and/or their brokerage firms. Financial Advisors who have engaged in misconduct or otherwise violated FINRA rules or regulations frequently surrender their license rather than cooperate in a FINRA investigation. In the past, FINRA has barred broker’s from the industry for participating in Ponzi schemes, elder financial fraud, breach of fiduciary duty and other misconduct. While a bar from the securities industry can be a powerful piece of evidence for investors pursuing FINRA arbitration claims against their advisors and/or their brokerage firms, investors should work with experienced securities and investment fraud attorneys to help maximize their recovery.
FINRA arbitration is separate and distinct from FINRA’s regulatory obligations. In our experience, FINRA regulatory focuses on punishing the wrongdoers but rarely results in compensation for the victims. For investors who have been defrauded by a financial advisor or others, FINRA arbitration is frequently the best place to secure a recover for losses.
Silver Law Group represents investors in securities and investment fraud cases through FINRA arbitration or court. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide in securities arbitration to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
Our lawyers have extensive experience collecting FINRA arbitration awards, prevailing on Motions to Vacate FINRA arbitration awards and using various collection efforts to enforce FINRA awards after they are received.