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New digital online-broker platforms get warning from FINRA

On Behalf of | Mar 3, 2021 | FINRA |

Residents of Altoona and other parts of Pennsylvania may want to be aware of a recent article discussing how the Financial Industry Regulatory Authority (FINRA) is warning broker-dealers about interactive game-like financial platforms. The warning has come about because these platforms may be violating FINRA rules related to communication with the public.

A communications failure

Specifically, the FINRA report, which was covered by a ThinkAdvisor article, stated that online brokers could be breaking its Communications With the Public rule. This rule covers all types of communications conducted by broker-dealers.

FINRA found that some broker-dealers were not listening to complaints from customers, reviews of advertising or representatives’ emails. Other means of communication by registered representatives were impermissible and included messaging, texting, social media, collaboration apps and chatrooms with “electronic sales seminars.”

Red flags

Some other concerns brought up in FINRA’s 2021 Examination and Priorities Report regard how online brokers review and follow up on red flags related to communications. FINRA sets standards related to both digital and traditional communications and seeks the principles of fair dealing and good faith. It promotes fairness in correspondence, retail communications and institutional communications, which are areas that some online brokers may need to improve upon.

Concerns were not answered

Recent news has come to light that investors with concerns are being ignored when emailing and contacting these game-like digital platforms. The activity regarding GameStop showed that many trading platforms were also using outside business activities (OBA) and other communication not allowed under current regulations, and some broker-dealers were failing to address these issues.

If you are the victim of a bad investment and need FINRA arbitration in a complaint against a broker-dealer, it may be wise to contact an attorney with experience in this form of law. Through personal representation, they may work with you to bring a strong case to protect your rights.


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