FINRA Looking to Expand Power to Enforce Restitution Orders

by Wall Street Fraud on January 6, 2012

Securities fraud attorneyThe Financial Industry Regulatory Authority is considering a new rule that would empower it to use court proceedings to collect restitution payments ordered in disciplinary cases against brokerages and brokers. The rule would still need to be approved by the Securities and Exchange Commission.

The proposal was prompted by a ruling by the Second U.S. Circuit Court of Appeals in New York that the regulator could not enforce its fines by filing lawsuits, Richard G. Ketchum, FINRA's chairman and chief executive, said in a recent press statement.

As we frequently discuss on this blog, federal and state regulators often order brokers and firms to pay restitution to harmed investors for funds they lost due to fraud or other misconduct. In addition, imposing fines serves the additional purpose of punishing brokers and firms for their wrongdoings and deterring similar securities violations.

"To the extent that a customer has been harmed and we're able to track that, we really think that it is appropriate for a (self-regulatory organization) to go beyond" its own enforcement proceedings to collect those funds, said Ketchum.

Source: Reuters

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