As reported in USA Today, FINRA has announced that it is increasing its fines and sanctions on brokers and brokerage firms. Fines will be attached to the Consumer Price Index increases. As a results some sanctions will immediately increase almost 50%. Other changes include:
• Upping suspensions for brokers who misrepresent themselves to customers to between 31 days and two years, up from a previous range of up to 30 days.
• Increasing suspensions for brokers who violate FINRA's suitability rules to up to two years from a previous range of up to one year's suspension. Brokers are required to base their investment advice on a client's risk tolerance and investment experience, also known as the client's suitability to any given investment.
• FINRA will start to advise its adjudicators, or judges in its enforcement cases, "to strongly consider" barring brokers for egregious misconduct, such as when a broker commits "intentional or reckless fraud" or commits serial violations. Currently, FINRA asks only that adjudicators "consider" barring brokers who have committed fraud or who are repeat offenders.
• FINRA will also start to advise its judges to "strongly consider" expelling firms that have engaged in egregious misconduct.
It appears FINRA is attempting to crack down on brokers with numerous complaints to avoid another Mark Hotton situation who was with Oppenheimer and eventually went to jail for 34 months only after he had 12 FINRA complaints.
Stuart D. Meissner Esq.
Stuart D. Meissner Esq. is an experienced FINRA attorney who has practiced law for over 27 years, including as a FINRA Attorney, Securities Regulator and Prosecutor.
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