Article | FINRA to Propose New Rule For All-Public Arbitration Panels

Next month, the Financial Industry Regulatory Authority (FINRA) will file a rule proposal to expand a two-year-old Public Arbitrator Pilot Program (pilot program) which would allow all investors filing arbitration claims the option of having an all-public arbitration panel. FINRA’s rule proposal will be filed for approval with the Securities and Exchange Commission. If approved, the rule would allow investors to choose an arbitration panel with two public arbitrators and one non-public arbitrator or an all-public panel. Currently, the pilot program allows investors filing an arbitration claim against 14 firms that volunteered for the program the option of choosing an all-public panel. The current pilot program is also limited to cases that do not involve individual brokers. The proposed rule would expand the pilot program to include all investor disputes against any firm and any individual broker, although the proposed rule would not apply to disputes involving only industry parties.

More than 60 percent (approximately 560 cases) of eligible investors chose to opt in since the pilot program began in October 2008. Of those investors, approximately 50 percent chose to include one non-public arbitrator on their panel. The pilot program was originally slated to conclude in October 2010, however, participating firms recently agreed to extend the pilot program for one-year in order to allow time for the rule making process to be completed.

You can read an interesting article about the rule proposal here. The FINRA news release may be read here.?

Disputing blogged on FINRA’s Public Arbitrator Pilot Program previously here.

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