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New Rules End FINRA “Whac-A-Mole” Strategy

Running a legal department at a financial services company has been a lot like the popular game Whac-A-Mole- as soon as one of those pesky complaint letters rears its head, whack it as hard as possible, perhaps with a small amount of money, and make sure the mole never appears again. However, an important part of that strategy now may be forced out of the financial services playbook.

If a financial services company happens to be a member of the Financial Industry Regulatory Authority, or FINRA, it simply has been able to insert a confidentiality clause in a settlement agreement with a wronged client. The confidentiality clause is designed to buy peace and quiet, keeping the client silenced. The traditional confidentiality agreement even enjoys FINRA’s blessing.

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Direct Link to Article on Daily Business Review