Regulation And Legislation

SIFMA: Raise bar on settlement reporting

SIFMA wants Finra to raise the threshold for reporting settlements with customers to $25,000, from $10,000.

The Securities Industry and Financial Markets Association wants the Financial Industry Regulatory Authority Inc. to raise the threshold for reporting legal settlements with customers to $25,000, from $10,000.
The Wall Street trade group is urging the higher bar as part of its response to a proposal floated in April by Finra that seeks to close a reporting loophole. Both groups are based in New York and Washington.
The loophole allows registered representatives to avoid reporting an arbitration claim if the lawsuit doesn’t specifically name the rep as a respondent.
As part of its proposal, Finra suggested raising the settlement reporting threshold to $15,000.
But a higher threshold makes sense for Finra to implement based “on criteria they suggested [in the proposal], namely the increase in [arbitration] forum costs,” Kevin Carroll, associate general counsel at SIFMA, said today.
Legal costs have risen significantly since 1996 when the $10,000 threshold was set, SIFMA wrote in a comment letter to Finra in May.
Finra is still reviewing comments, according to spokesman Herb Prone.
A final rule proposal would have to be filed with the Securities and Exchange Commission for approval.
Mr. Carroll said that SIFMA is hopeful for a higher threshold because Finra is at least “predisposed to look” at raising the amount.