The Financial Industry Regulatory Authority (FINRA) is currently seeking comment on two proposals related to its arbitration program.
One of the proposals is to expand the options available to investors when filing a claim in arbitration against an inactive firm or associated person. It proposes amendments to FINRA’s arbitration rules to allow customers to withdraw an arbitration claim, amend pleadings, postpone hearings, and receive a refund of filing fees under these situations.
The second is related to compensated non-attorney representatives that provide public investors an alternative to representation by attorneys in disputes between investors and broker-dealers.
The proposed amendments would allow customers to evaluate the likelihood of collecting on an award and make an informed decision about whether to proceed in arbitration, to file the claim in court or to amend his or her claim to add other respondents from whom the customer may be able to collect should the claim go to award.
“FINRA is committed to continuously reviewing its arbitration program to improve the quality of arbitration and ensure the integrity of the arbitration process,” Richard Berry, executive vice president of FINRA’s Office of Dispute Resolution, said. “The proposed amendment is intended to help further address the issue of unpaid customer arbitration awards by expanding the options available to customers.”
FINRA is also conducting a review of the efficacy of continuing to allow compensated non-attorney representatives (NAR firms) to represent customers in arbitration.
“While NAR firms provide service to public investors with small claims, among others, some of the alleged inappropriate business practices reported to FINRA raise serious concerns,” Berry said. “Therefore, it is prudent for FINRA to consider the representation of parties by NAR firms.”