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FINRA Files to Amend Arbitrator Hearing Procedures

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The Financial Industry Regulatory Authority has filed with the Securities and Exchange Commission a proposed rule change to amend the hearing provisions in FINRA rules to provide an additional hearing option for parties in arbitration with claims of $50,000 or less, excluding interest and expenses.

FINRA is proposing to amend Rules 12800(c) and 13800(c) in the Code of Arbitration Procedure for Customer Disputes and Arbitration Procedure for Industry Disputes to provide that parties that opt for a hearing must select between two hearing options.

Option one would be the current hearing option that provides for the regular provisions of the codes relating to prehearings and hearings, including all fee provisions. If the parties choose this option, they would continue to have in-person hearings without time limits, and they would continue to be permitted to question opposing parties’ witnesses.

Option two would be the new Special Proceeding subject to the regular provisions of the code relating to prehearings and hearings, including all fee provisions, with several limiting conditions. “The conditions are intended to ensure that the parties have an opportunity to present their case to an arbitrator in a convenient and cost-effective manner without being subject to cross-examination by an opposing party,” FINRA said.

Meanwhile, the Feb. 5 deadline to submit comments on FINRA’s proposal to establish a roster of arbitrators who would decide expungement requests is fast approaching.

As laid out in Regulatory Notice 17-42, FINRA proposes to establish a roster of arbitrators with additional training and specific backgrounds or experience from which a panel would be selected to decide an associated person’s request for expungement of customer dispute information.

— Check out FINRA Launches Helpline for Small Firms on ThinkAdvisor.