William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Arbitration’

FINRA Plans New Power Grab as SEC Falters

Posted by William Byrnes on August 2, 2011


FINRA is continuing its recent power-grab in the face of a largely impotent and underfunded Securities and Exchange Commission. As the next stage in an increasing series of regulations and information reporting requirements, plans are in the works for a new-and-improved examination program that could further increase the information reporting requirements of member firms and significantly increase their compliance burden.

Read this complete analysis of the impact 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 regulatory action in Advisor’s Journal, see Broker Bonus Arbitration Bottleneck Forces FINRA to Reconsider Arbitrator Qualification Standards (CC 11-08),  SEC Approves FINRA Suitability and Know-Your-Customer Rules (CC 11-17), & New FINRA Rule Restricts Brokers’ Outside Business Activities (CC 10-110).

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Broker Bonus Arbitration Bottleneck Forces FINRA to Reconsider Arbitrator Qualification Standards

Posted by William Byrnes on February 7, 2011


Brokerages are increasingly looking to claw back signing bonuses from bonus baby brokers who leave for another firm. Signing bonuses at the big broker-dealers saw a big jump in 2008, just as the economy took a dive. Signing bonuses of up to $3 million were being offered to brokers who generated $1 million in commissions and fees in the prior year. And a few bonuses paid at Wall Street firms were reported to have been as high as $10 million. But because many of the bonuses were based on the prior year’s inflated numbers, brokerage firms ended up paying too much for too little performance during an economic slowdown.

Now a bottleneck is developing in arbitration cases dealing with brokers’ signing bonuses, forcing FINRA to reduce the qualifications for persons serving as arbitrators in order to expand its rolls and push the cases through the system. About 1,100 bonus cases have been filed by brokerages as of December 12, compared to just 415 cases in 2008. About 17 percent of 2010 FINRA arbitration cases were bonus-related cases.  Read this complete analysis of the impact 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 broker and securities arbitration in Advisor’s Journal, see FINRA Proposes Eliminating Industry Insiders from Arbitration Panels (CC 10-80) and Mandatory Securities Arbitration Clauses on the Chopping Block (CC 10-48).

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