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Brokerages not Paying out Arbitration Awards

Aware of this issue for many years, FINRA has made little progress in finding a way to ensure investors get what they are owed. Back in 2000, a report was issued by the U.S. Government Accountability Office that stated, the industry needed to address the problem of unpaid arbitration awards. With the decline of the broker dealer industry and many firms shutting down the last few years, this issue on unpaid awards to investors is more demanding.

Some experts believe the solution is requiring firms to carry insurance to cover the payment of arbitration awards, but broker dealers who have carried insurance for these investor claims, have proven to be limiting resulting in low payouts or the specific types of claims not being covered.

With new FINRA CEO, Robert Cook, it is being suggested he start off his new role fixing this issue and making his mark for retail investors. The latest industry talk is the idea of establishing a fund for investors of unpaid arbitration awards, but with the long history of no solutions for this growing problem who knows what will happen.

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