May 11, 2016

Warren and Cotton Raise Bipartisan Concerns About Financial Adviser Misconduct, Ask FINRA to Protect Investors

Text of the letter available here

Washington, DC - In a bipartisan letter sent to the Financial Industry Regulatory Authority (FINRA) today, United States Senators Elizabeth Warren (D-Mass.) and Tom Cotton (R-Ark.) asked about steps the independent regulator is taking to address misconduct among financial advisers and to protect investors. The letter comes after a recent study found high rates of misconduct among advisers under FINRA's supervision, and revealed ineffective sanctions for this misconduct.

"Although the vast majority of professionals in the industry conduct themselves ethically, patterns of misconduct highlighted in the study are concerning," Warren and Cotton wrote. "The risks to investors posed by advisers with a disciplinary history are disturbing - but they are not unpredictable... FINRA is responsible for addressing the risks posed by these brokers and firms so that investors can obtain the scrupulous, high-quality financial advice they deserve."

The senators' letter asks FINRA to provide information about steps it is taking to address high levels of adviser misconduct and recidivism, as well as steps it is taking to address the problem of firms that employ a large share of advisers with a history of misconduct.

"The evidence clearly shows that FINRA's efforts to date have not been enough to address the incidence of misconduct among financial advisers.  Each day that FINRA fails to take stronger action is another day that working families will be exposed to an unacceptably high risk of financial adviser misconduct," wrote the senators.

Read a PDF copy of the letter here.