NASAA Members Approve Model Rule Addressing Unpaid Client Arbitration Awards

Posted on June 7th, 2022 at 11:43 AM
NASAA Members Approve Model Rule Addressing Unpaid Client Arbitration Awards

From the Desk of Jim Eccleston at Eccleston Law:

The North American Securities Administrators Association (NASAA) and its members have voted to adopt a model rule addressing financial advisory firms that fail to pay customer arbitration awards. 

According to NASAA President Melanie Lubin, “Broker-Dealers and investment advisers should promptly pay any arbitration awards or regulator-imposed fines and if they do not, this model rule provides state regulators with another means to take action against them.” Pursuant to the model rule, a failure to pay any investment-related, customer-initiated arbitration award or judgment, fine, civil penalty, order of restitution, or order of disgorgement would constitute a dishonest or unethical practice. 

Financial advisory firms may avoid regulatory actions by engaging in alternative payment arrangements pertaining to obligations promulgated by the model rule. In essence, the model rule will serve as an additional basis for enforcement actions related to unpaid arbitration awards and may incentivize financial advisory firms to satisfy their monetary obligations to clients.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

 
 

Tags: eccleston law, nasaa, financial advisory firms

Return to Archive

TESTIMONIALS

Previous
Next

The work that you and your team have performed on my behalf is exemplary.

JT

LATEST NEWS AND ARTICLES

May 13, 2025
Merrill's Investment Solutions Chief Outlines Growing Role for Alternatives in Client Portfolios

At Merrill and Bank of America Private Bank, alternative investments have become a core focus of portfolio construction, according to Financial Planning.

May 12, 2025
FINRA Clarifies Proposed Changes to Outside Activities Rule

FINRA released a statement this week addressing misconceptions surrounding its proposed updates to the rules governing outside business activities by associated persons of broker-dealers.

May 9, 2025
FINRA Suspends Former Wells Fargo Advisor Over Unauthorized Transfer in Elderly Client's Account

FINRA has fined and suspended former Wells Fargo financial advisor Jarrett Thomas after he executed a $50,000 transaction for an elderly client despite being informed that she was no longer capable of managing her finances.