SEC approves securities arbitration fraud intervention rule
The U.S. Securities and Exchange Commission has approved a rule that will let securities arbitrators immediately report frauds that may threaten the investing public if they learn about them in the middle of a case.
The agency's approval, published in the Federal Register on Wednesday, ends years of controversy about the proposal, which was sparked by multibillion-dollar Ponzi schemes orchestrated by Bernard Madoff and R. Allen Stanford.
Wall Street's industry-funded watchdog, the Financial Industry Regulatory Authority (FINRA), had been pushing to put the so-called "mid-case referral rule" in place since 2010. Allowing securities arbitrators to voice serious concerns in the middle of a case about possible frauds that could harm investors is a procedure that provides "a necessary means" of alerting FINRA staff to such threats, the SEC wrote in a notice. Read more on Reuters.