Advisors May Come Under Greater Risk With New FINRA Award Levels

FINRA aims to raise arbitration awards, making it more impactful for advisors to be found at fault. The increase in awards is still in the proposal stage and is open for comment until March 20. In a simplified arbitration, there is no hearing unless the client requests it. This will save costs and it will also put advisors at greater risk since they have no forum to defend themselves. Minimal discovery and minimal involvement will make it easier to blame advisors, even in cases of market volatility. It may make it easier for clients to bring complaints since there will be no contact with the advisor.  
There is still time to weigh in on this issue. The changes could practically double the number of cases brought against advisors, rightly or wrongly. Based on the number and nature of comments received, amendments may be proposed which will lengthen the period for comment. There has been no date set for approval so there is still time to influence this decision.

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