Warning! Finra Arbitration Filings Down, S&P 500 Up

Below is a visualization of  annual Finra Arbitration Filings as compared to the S&P 500 annual closing value.  Since 1999, there is a significant negative correlation of -0.594 between the two.  When arbitration filings have peaked it has been a buy signal, and vice versa.

On the lower pane of the viz, I have plotted the annual Finra Arbitration Filings and colored the marks by the number of claims involving suitability.  Clearly, as suitability claims have waned, the market has topped out.  (Note the 2012 data is through September.)

Two clear take-aways:

  • This is a sell signal for investors
  • Broker/Dealers planning legal and compliance budgets for 2013 should take note


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Posted on October 17, 2012 in Compliance, Finra, Litigation, Regulation, SEC

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