Sonn Law Group Encourages All Stockmarket Investors To Call Their Senators And Congresspersons To Support The Unpaid Arbitration Pool So That Victims Of Bad Brokers Can Get Justice
“This is a law that is badly needed to protect investors from bad brokers who don’t pay arbitration awards meant to reimburse customers who lost money by bad for fraudulent investment advice,” said Jeffrey Sonn, Esq. a national securities litigation attorney at Sonn Law Group in Miami.
“Call your senator and congresspeople now to support this important bill,” added Sonn.
MARCH 6, 2018 – Washington, DC – United States Senator Elizabeth Warren (D-Mass.) today introduced the Compensation for Cheated Investors Act which would direct the Financial Industry Regulatory Authority (FINRA) to use its existing authority to compensate investors for unpaid arbitration awards against FINRA members.
Investors don’t win very often in the arbitration process – and when they do, they often don’t get paid. According to a December 2015 report by FINRA’s Dispute Resolution Task Force, investors were unable to collect more than $62 million in unpaid arbitration awards in 2013 alone. A study by the Public Investors Arbitration Bar Association determined that one-third of all arbitration awards in 2013 went unpaid and that the $62 million in unpaid awards represented nearly a quarter of the total amount of arbitration awards that year.
“FINRA has the authority to make sure defrauded investors don’t get stiffed – and this bill will make sure it uses it,” said Senator Warren. “Unpaid arbitration awards have cost ordinary investors hundreds of millions of dollars over the years. FINRA is supposed to be looking out for them, not the brokers and dealers who cheat them.”
FINRA – and its predecessor self-regulatory organizations – have let this problem continue for too long. A 2000 report from the non-partisan United States General Accounting Office (GAO) found that 49 percent of investor arbitration awards in 1998 went entirely unpaid by broker-dealers and an additional 12 percent were only partially paid. The GAO recommended that the self-regulatory organizations “develop procedures addressing the problem of unpaid awards caused by failed broker-dealers.” But nearly two decades later, FINRA still has not established such procedures.
The Compensation for Cheated Investors Act would direct FINRA to establish a pool funded by penalties from members that will pay unpaid final arbitration awards and require it to track whether future arbitration awards are paid.