FINRA Sends “Public Arbitrators” Rule to SEC for Approval

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On June 30, 2014, the Financial Industry Regulatory Authority (“FINRA”) sent its proposed rules to limit the definition of “public arbitrators” to those without any experience in the securities industry.  Previously, an arbitrator who had in the past worked in the securities industry but did not currently work in the industry could qualify as a “public” rather than a “non-public” or “industry” arbitrator.  See FINRA Rules 12100 and 13100.  According to FINRA, people “who represent investors or the financial industry as a significant part of their business would also be classified as non-public arbitrators, but could become public arbitrators after a cooling-off period.”

The new proposed rules are designed to address the perception among investors of an industry bias.  They comes after prior amendments in 2013 elicited a large number of comments about the need for a more comprehensive approach to the classifications.  The SEC is accepting comments in the proposed amendments to FINRA Rules 12100 and 13100.

 

Topics:  Arbitration, Arbitrators, Compliance, FINRA, SEC

Published In: Alternative Dispute Resolution (ADR) Updates, General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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