II 

115TH CONGRESS 

2D SESSION S. 2499 

To require the Financial Industry Regulatory Authority to establish a relief 

fund to provide investors with the full value of unpaid arbitration awards 

issued against brokerage firms or brokers regulated by the Authority. 

IN THE SENATE OF THE UNITED STATES 

MARCH 6, 2018 

Ms. WARREN introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To require the Financial Industry Regulatory Authority to 

establish a relief fund to provide investors with the full 

value of unpaid arbitration awards issued against brokerage firms or brokers regulated by the Authority. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. FINRA RELIEF FUND. 

4 (a) DEFINITIONS.—In this Act: 

5 (1) BANK.—The term ‘‘bank’’ means— 

6 (A) a banking institution organized under 

7 the laws of the United States; 


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1 (B) a member bank of the Federal Reserve 

2 System; 

3 (C) any other banking institution— 

4 (i) whether incorporated or not, doing 

5 business under the laws of any State or of 

6 the United States, a substantial portion of 

7 the business of which consists of receiving 

8 deposits or exercising fiduciary powers 

9 similar to those permitted to national 

10 banks under the authority of the Comp11 troller of the Currency pursuant to the 

12 first section of the Act entitled ‘‘An Act to 

13 place authority over the trust powers of 

14 national banks in the Comptroller of the 

15 Currency’’, approved September 28, 1962 

16 (12 U.S.C. 92a); 

17 (ii) supervised and examined by a 

18 State or Federal authority having super19 vision over banks; and 

20 (iii) that is not operated for the pur21 pose of evading the provisions of that Act; 

22 and 

23 (D) a receiver, conservator, or other liqui24 dating agent of any institution or firm de25 scribed in subparagraph (A), (B), or (C). 


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1 (2) BROKER.—The term ‘‘broker’’— 

2 (A) means any individual, corporation, 

3 partnership, association, joint stock company, 

4 business trust, unincorporated organization, or 

5 any other legal entity engaged in the business 

6 effecting transactions in securities for the ac7 count of others; 

8 (B) has been admitted to membership in 

9 FINRA; and 

10 (C) is not a bank. 

11 (3) BROKERAGE FIRM.—The term ‘‘brokerage 

12 firm’’ means any broker or dealer admitted to mem13 bership in FINRA. 

14 (4) FINRA.—The term ‘‘FINRA’’ means the 

15 Financial Industry Regulatory Authority. 

16 (5) RELIEF FUND.—The term ‘‘relief fund’’ 

17 means the relief fund that FINRA is required to es18 tablish under subsection (b). 

19 (b) FUND ESTABLISHED.—FINRA shall establish a 

20 relief fund that shall be used to provide an investor with 

21 the full value of an arbitration award that— 

22 (1) was issued in favor of the investor against 

23 a brokerage firm or a broker regulated by FINRA; 

24 (2) was confirmed in a court of competent ju25 risdiction in a final order that is not appealable; and 


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1 (3) is unpaid as of the date that the investor 

2 submits a claim to the relief fund. 

3 (c) NO LIMITATIONS.—FINRA may not— 

4 (1) limit the amount that an investor may re5 ceive from the relief fund; or 

6 (2) prohibit any investor from submitting a 

7 claim to the relief fund. 

8 (d) IDENTIFICATION OF SUFFICIENT FUNDS.— 

9 FINRA shall ensure that— 

10 (1) there are sufficient reserves in the relief 

11 fund to provide each investor that submits a valid 

12 claim to the relief fund with the entire amount owed 

13 to that investor, including in a year in which there 

14 may be an unusually large number of unpaid arbi15 tration awards that are subject to claims from the 

16 relief fund; 

17 (2) the reserves described in paragraph (1) are 

18 obtained from brokerage firms or brokers regulated 

19 by FINRA and not from investors; and 

20 (3) the relief fund shall be funded first from 

21 penalties paid by brokers and then from sources de22 termined by FINRA. 

23 (e) DISCLOSURE.—FINRA shall annually disclose on 

24 a publicly available website— 


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1 (1) for the year covered by the disclosure, the 

2 total number of arbitration awards issued in favor of 

3 investors against brokerage firms or brokers regu4 lated by FINRA, including— 

5 (A) the total dollar amount of such 

6 awards; 

7 (B) the number of such awards that, as of 

8 the date of the disclosure, are unpaid, including 

9 the total dollar amount of the unpaid awards; 

10 and 

11 (C) with respect to each arbitration award 

12 issued against a broker regulated by FINRA— 

13 (i) the name of the brokerage firm or 

14 broker regulated by FINRA against which 

15 the award was issued; 

16 (ii) the total amount of the award; 

17 (iii) the specific claims asserted by the 

18 investor in the arbitration; 

19 (iv) the date by which the award was 

20 required to be paid in full (pursuant to 

21 FINRA rules); and 

22 (v) the actual date the award was 

23 paid in full or, if any part of the award 

24 has not been paid in full, an explanation as 

25 to why not; and 


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1 (2) beginning in the first full year after the re2 lief fund is established, the number of— 

3 (A) claims made to the relief fund during 

4 the year covered by the disclosure; and 

5 (B) investors that made claims to the relief 

6 fund that, as of the date of the disclosure, have 

7 not obtained an amount from the relief fund. 

8 (f) IMPLEMENTATION.— 

9 (1) IN GENERAL.—FINRA shall— 

10 (A) not later than 1 year after the date of 

11 enactment of this Act, promulgate such regula12 tions as FINRA determines are necessary to es13 tablish the relief fund; and 

14 (B) when adopting rules under paragraph 

15 (1), establish a procedure for submitting a 

16 claim to, and recovering an amount from, the 

17 relief fund that— 

18 (i) reduces the burden on investors; 

19 and 

20 (ii) ensures that an investor obtains 

21 an amount from the relief fund as quickly 

22 as is practicable after submitting a valid 

23 claim to the relief fund. 

24 (2) FAILURE TO PROMULGATE REGULATIONS.— 

25 If FINRA fails to promulgate the regulations under 


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1 paragraph (1), FINRA shall use amounts made 

2 available to FINRA from its general budget to pay 

3 claims made to the relief fund. 

4 (g) CLAIMS.—FINRA may require investors to sub5 rogate their claims against brokers and FINRA may pur6 sue additional remedies against the brokers. 

Æ 


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