Important Changes Coming to FINRA Arbitration Panels

On February 26, 2015, the SEC approved FINRA’s rule proposal to redefine the definitions of “non-public arbitrator” and “public arbitrator” in FINRA’s Arbitration codes.

FSI filed a comment letter to the proposal supporting FINRA’s proposal to expand the scope of “non-public” arbitrators who devote considerable time to serving as representatives of investors in arbitration. FSI’s letter also expressed concern with the permanent bar on individuals previously employed in the securities industry, but we are pleased that FINRA has added some necessary balance to the composition of arbitration panels.

FSI applauds FINRA for making this important rule change. This change will substantially improve arbitration process and ensure that panels are composed of public arbitrators that truly represent the public.

The changes will also mean that industry participants are permanently barred from the public roster so any arbitrator who has spent any time working in the securities industry will always be on the “non-public” roster. In the alternative, plaintiffs attorneys will be able to requalify for the public roster under certain circumstances where they no longer serve as plaintiffs counsel for a certain period of time.

The rule is expected to become effective in the following months. To read more and find out when the rule becomes effective, please visit our FSI Advocacy Report (member login required).

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