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II. Arbitration [Version up to Mar. 22, 2011]

Arbitration Award—Failure to Honor or Failure to Honor in a Timely Manner

FINRA Rules 2010 and 103301

Principal Considerations in Determining Sanctions Monetary Sanction Suspension, Bar or Other Sanctions
See Principal Considerations in Introductory Section
1. Whether the respondent has paid any portion of the arbitration award.
2. Whether the respondent has made a good-faith attempt to satisfy the award in whole or in part. Consider the promptness of any such good-faith effort.
3. Whether the respondent negotiated a settlement or payment schedule with the arbitration claimant and then failed to abide by the terms of the agreement.
Failure to Honor

Fine of at least $5,000.

In egregious cases, consider incorporating a daily escalator into the fine amount.

Failure to Honor in a Timely Manner

Fine of at least $2,500
Failure to Honor

Suspend the respondent in all capacities until the respondent satisfies the arbitration award (by payment or fully paid settlement) plus at least 30 additional business days. In egregious cases, consider a bar.

Failure to Honor in a Timely Manner

Suspend the respondent in all capacities for up to five business days.

1 In addition, FINRA Rule 9554 indicates that FINRA also may suspend or cancel the membership of a member or the registration of a person for failure to honor an arbitration award or settlement agreement related to an arbitration or mediation under Article V, Section 3 of the FINRA By-Laws. This guideline also is appropriate for violations of MSRB Rule G-35.

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