According to the SRO's, somewhere between 80 and 90 % of fines imposed on individuals are never collected.This is the main issue. Unpaid fines on such a scale make a mockery of the enforcement system and the general deterrence value of fines. This needs to be changed.The core issue is that dealers are not held accountable for the actions and inactions of their staff/ agents. If they were ,there would be a small collection problem.If a carpet cleaner ruins your rug , the firm , not the individual is held accountable. The financial services industry immunized themselves by having regulators chase the small fry who often can't pay or go bankrupt.This has zero deterrent value and reflects poorly on the industry and its regulation. Still, until the system is fixed, better fine collection is needed .
Improve supervisory controls over Reps -prevent problems
Link to insurance and banking regulators to deal with dual -licensed Reps
Incentivize collection staff with a bonus program
Use dedicated ,well trained specialist staff for collections
Use outside professional collection agencies whwn required
Withhold x weeks pay as collateral
Make fine collection a defined annual executive compensation objective of each commission chairman and SRO president
Seize termination payouts and post employment benefits if and as applicable
Require all securities commissions to publish detailed unpaid fines information
Check to see if EI , CPP et al benefits can be seized;Use wage garnishment
Strengthen "advisor" recruitment screening processes and hiring criteria
Introduce an effective internal whistleblowing program at dealer level
Get more aggressive on fraud prosecutions - work with law enforcement
Notify professional Associations which the Rep is licensed with eg FPSC ( CFP designation)
Caveat Emptor !