The NASD, the self-regulatory organization of the U.S. securities industry, has received stronger powers to keep brokers out of the industry if they fail to pay arbitration or settlement awards.

The Securities and Exchange Commission has approved amendments to NASD by-laws that will enable the NASD to institute suspension proceedings against a former broker who fails to pay an award or settlement, for up to two years from the date the award.

In most cases, NASD retains jurisdiction over a broker for two years after termination of registration or association with a firm, for conduct that occurred while he or she was still employed by or associated with a firm. This rule change explicitly allows NASD to retain jurisdiction over former brokers for two years from the date of an award or settlement, regardless of how long that award or settlement is entered after the broker left the industry.

The NASD says that a suspension of a former broker for non-payment of an award or settlement would not only prevent that individual from re-registering as a broker, but would prevent them from associating with a regulated firm in any capacity until the award or settlement is paid.

NASD will implement its new authority beginning September 9.