Financial Advisor IQ: Call Comes for Stiffer Penalties on Recidivist Brokers and Firms That Hire Them
The American Securities Association believes Finra isn’t going far enough in its efforts to deal with member firms who regularly hire bad actors with significant misconduct records.
The ASA says the self-regulator should impose stricter penalties — including a lifetime ban on the bad actors and a capital charge on the erring member firms — to weed out the worst actors that tarnish the industry. The ASA is a lobby group for middle-market financial services firms, including broker-dealers and advisory firms.
In May, Finra proposed a new rule — Rule 4111 (Restricted Firm Obligations) — that would impose additional obligations on firms with a significant history of misconduct.
The solutions and penalties outlined in the proposal “do not go far enough to remove the most egregious actors from our industry, and they could ultimately harm the Main Street investors and retirement savers it seeks to protect,” ASA CEO Christopher Iacovella says in a comment letter the group submitted to Finra on Tuesday night and seen ahead of time by FA-IQ.
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