The North American Securities Administrators Association ("NASAA") requested comment on a proposed model rule intended to address unpaid arbitration awards and fines.
NASAA stated that the proposed model rule would allow state securities authorities to bring enforcement actions and prevent the registration of firms and individuals with outstanding arbitration awards or fines. The proposed model rule would amend NASAA Model Rule USA 2002 502(b) ("Prohibited Conduct in Providing Investment Advice") and NASAA Model Rule 102(a)(4)-1 ("Unethical Business Practices of Investment Advisers").
The proposed model rule would add the following as "dishonest or unethical business practices" of broker-dealers, investment advisers or registered investment adviser representatives:
- failure to fully pay any arbitration award arising from an arbitration initiated by a client or customer;
- attempts to avoid the payment of any arbitration award arising from arbitration initiated by a client or customer; and
- failure to pay any monetary obligation resulting from a regulatory action.
Comments on the proposal must be received by November 4, 2021.
Primary Sources
- NASAA Press Release: NASAA Seeks Public Comment on Proposed Model Rules to Combat Unpaid Arbitration Awards and Fines
- NASAA Request for Public Comment Regarding a Proposed Model Rule for Unpaid Arbitration Awards Under the Uniform Securities Acts of 1956 and 2002
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