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December 18, 2013

FINRA’s Efforts to Minimize Rogue Brokers

The Financial Industry Regulatory Authority (FINRA) has reported that they will begin to put more focus on high risk brokers in an effort to improve investor protection. FINRA currently licenses 634,955 brokers, and of those 634,955 only 487,480 brokers possess clean records. The Wall Street Journal reported that at least 70,000 brokers have reportable offenses on their publicly available disciplinary record, known as their “CRD” and about 2,695 brokers have five to nine complaints and or regulatory actions on their record. In order to improve investor protection, FINRA uses an analysis called the “broker migration model” which traces brokers that have worked for firms that were expelled from the industry. So far under the new program, FINRA has barred sixteen brokers.

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