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FINRA Floats New Penalty To Deter Recidivist Brokers

Law360 (May 2, 2019, 2:32 PM EDT) -- The Financial Industry Regulatory Authority on Thursday proposed making broker-dealers staffed by people with a history of misconduct on Wall Street put cash or securities in reserve, with the expectation that the firms may eventually owe investors money or correct their ways to get back the capital.

The move would give regulators new leverage over broker-dealers ahead of a formal enforcement action, which could push firms to keep better tabs on compliance or disincentivize firms from hiring bad actors in the first place.

“You want them to have some skin in the game,” said Elisse Walter, a FINRA governor and former...

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