The Wall Street Reform Act expressly gives the SEC the power to prohibit or restrict mandatory securities arbitration agreements.

The analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal Mandatory Securities Arbitration Clauses on the Chopping Block

After reading the analysis, we invite your questions and comments about indexed annuities by posting them below, or by calling the Panel of Experts.

Buzz about the Financial Industry Regulatory Authority, Inc. (FINRA) taking responsibility for regulation of investment advisers has been circulating for a couple of years now—but the talk is suddenly sounding less like gossip and a lot more like a plan. Last week, FINRA’s chief executive, Richard Ketchum, sent a letter to the SEC touting the benefits of appointing a self-regulatory organization (SRO) to oversee advisors. Although Ketchum’s letter does not directly ask the SEC to cede some of its regulatory authority over advisers to FINRA, hints abound.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed earlier this year, mandates an SEC study of its investment advisor examinations and whether delegation of advisor regulation to an SRO would improve examinations.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of FINRA in Advisor’s Journal, see FINRA Proposes Eliminating Industry Insiders from Arbitration Panels (CC 10-80).

We invite your questions and comments by posting them below, or by calling the Panel of Experts.

FINRA has proposed new arbitration rules that would give investors the option of selecting all-public arbitration panels without an industry representative. Use of all-public panels excluding industry insiders is meant to bolster public confidence in the arbitration process. But the absence of financial professionals on the arbitration panels will undoubtedly disadvantage the financial institutions and professionals involved in many cases. 

Although an outright prohibition of mandatory arbitration clauses would hurt financial services firms and their employees by allowing some consumers to take the expensive litigation route, the proposed FINRA rules may counteract any migration away from arbitration by motivating some investors who are leery of arbitration panels that include an industry representative to utilize public-only arbitration, keeping those cases out of court.

AdvisorFX Advisor’s Journal will keep you updated on the development of both the FINRA arbitration proposal and SEC action on mandatory arbitration clauses.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of securities arbitration in Advisor’s Journal, see Mandatory Securities Arbitration Clauses on the Chopping Block (CC 10-48).

We invite your questions and comments by posting them below or by calling the Panel of Experts.