FINRA News

According to a recent Reuters.com article, July 2, 2012 will be the launch date for a new FINRA program that will allow more flexibility in large arbitration cases. The new program will be for claims $10 million dollars or more and allow them to shape their cases and bypass some of the FINRA arbitration rules, the article explains. While the majority of FINRA arbitrations are not dealing with disputes at the $10 million dollar mark, those roughly 6,500 cases are very time consuming and expensive going through the traditional FINRA process. If the program is a success, FINRA plans on asking the SEC to formalize it. […]

The SEC approved two proposals to alter trading curbs meant to curtail volatility in the U.S. stock market, according to a Bloomberg.com article. A  limit-up/limit-down system that prevents trades at prices outside a specified band has been approved. The article stated that also the SEC has supported changes to broaden circuit breakers instituted after the 1987 market crash. Both programs will be implemented for a one year pilot period, to start next on February 4, 2013. FINRA oversees more than 4,400 brokers and introduced the curbs for individual stocks in May 2010 and later asked for and received permission to test the limit-up/limit-down system. […]

According to a FINRA press release Morgan Stanley, UBS, Wells Fargo and Citigroup have all been fined by the financial regulatory authority. For a year and a half, the firms did not have adequate systems in place to supervise the sale of leveraged and inverse ETFs.  FINRA also found that the firms did not conduct adequate due diligence in determining the risks and features of the ETFs.  The press release further stated that the firms kept investors in ETF holdings for much longer than they should have been in, especially with the volatile market during the relevant time period. […]