The industry group that regulates securities brokerages has decided it cannot force firms to carry insurance for payment of awards granted by arbitration panels or courts to customers who have lost money, a spokeswoman said on Monday. After agreeing a year ago to consider an insurance requirement, officials from the Financial Industry Regulatory Authority decided they could not impose one. FINRA oversees investment brokers, from large firms like Merrill Lynch and Charles Schwab to the 5,000 independent broker-dealers that operate across the country, many of which are managed by only a handful of people and have net capital requirements of $100,000 or less. Without insurance, brokerage firms often cannot pay judgments or arbitration awards lodged against them. If an award is higher than the total in their bank accounts, the firms close up shop and their principals, if they are named in the cases, declare bankruptcy. Customers judged to have been treated unfairly are out of luck. "We
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