Weighing in on all things financial services, top securities industry lawyer, Jenice L. Malecki, commented on two matters going on at the Financial Industry Regulatory Authority (FINRA).
First, under fire again, it looks like another FINRA arbitration is poised for potential vacatur because of the conduct of an over-reaching, advocatory-styled arbitrator who would not give a customer their day in court. A Florida state court is now entertaining a case where the Alabama Securities Commission is seeking to vacate an award that granted expungement of customer complaints from a UBS broker’s record.
Ms. Malecki discussed with Financial Planning Magazine how this is not only bad for the customer, but also bad for the broker. It taints the proceedings and runs up the bills unnecessarily. Moreover, this broker will also now have a hotly contested court case on his record when all he did was follow FINRA’s rules. The broker did not exclude the client, the arbitrator did. There needs to be a stronger and better monitored process at FINRA for the sake of all interested parties, as well as stronger monitoring of that process by FINRA – not just letting arbitrators act like self-appointed judges without oversight. Even the best judges in the world are subject to oversight, but FINRA arbitrators are not. The scenario presented is not shocking. It was just a matter of time before something like this happened, and FINRA should have seen this coming for years.