December 8, 2021

Volume XI, Number 342

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December 07, 2021

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December 06, 2021

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National Adjudicatory Council Revises FINRA Sanction Guidelines

In FINRA Regulatory Notice 20-37, FINRA set forth revised Sanction Guidelines that became effective October 20, 2020.  The new FINRA Sanction Guidelines now expressly contemplate “whether the customer is age 65 or older” and “whether the respondent exercised undue influence over the customer and whether the customer had a mental or physical impairment that renders the person unable to protect his or her own interests”.  The revisions to the Sanction Guidelines come after both FINRA and the National Adjudicatory Council (NAC) reviewed the current guidelines and expressed concerns over potential undue influence exercised over senior investors or those investors who may not be able to protect their own interests.

In the revised Sanction Guidelines, FINRA and the NAC now directly address the issue of potential senior investor abuse, while revising the Sanction Guidelines to be consistent with FINRA Rule 2165 – Financial Exploitation of Specified Adults .  Further, FINRA asserts that “as with other considerations in the Sanction Guidelines, adjudicators should take a principles-based approach to assessing if the rule violations have more impact on elderly or impaired customers, including the customer’s ability to recover from sustaining financial losses”.  In addition, FINRA states that these revisions to the Sanction Guidelines should be considered by adjudicators as only “aggravating factors” when considering an appropriate sanction for a FINRA violation.  While the FINRA Sanction Guidelines do not set forth fixed sanctions for a particular violation, they now provide adjudicators with an additional “aggravating factor” to contemplate in determining the appropriate sanction.

©1994-2021 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume X, Number 307
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About this Author

David L. Ward Member Securities Litigation White Collar Defense & Government Investigations Complex Commercial Litigation Arbitration, Mediation, ADR
Member

David Ward focuses his practice on financial services regulatory matters, internal investigations and related litigation. He represents financial services clients throughout the United States, including broker-dealers, investment advisors, banks, pension consultants, insurance companies and publicly traded entities before the SEC, FINRA, CFTC, U.S. Department of Justice and state regulators. David regularly assists clients in internal investigations; the defense of regulatory investigations, sales practice issues, corporate governance matters and securities-related litigation in state and...

617-348-4860
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