FINRA strengthens broker penalty guidelines

Wall Street’s self-regulator, the Financial Industry Regulatory Authority, has stiffened some of its penalties and issued more aggressive guidelines for dealing with brokers and firms that violate securities rules or commit fraud.

FINRA announced yesterday its National Adjudicatory Council increased the maximum suspension - to two years from one year - for brokers found to have recommended an unsuitable investment to customers, according to the Wall Street Journal.

In aggravated circumstances, FINRA judges are now advised to “strongly consider” permanently barring a broker from the securities industry rather than merely "considering" a bar. The same language applies to cases related to fraud, misrepresentations or material omissions of facts.

Read more from the Wall Street Journal.