FINRA Implements Reforms to Arbitrator Selection Process
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (“FINRA”) is rolling out reforms to its arbitration forum's panel selection process. The changes stem from recommendations made by an external law firm in December 2022, aiming to bolster fairness and transparency in the program, which handles the majority of industry and customer disputes.
As reported by AdvisorHub, the reforms formalize FINRA's existing arbitrator selection system, utilizing both algorithmic screening and manual conflict reviews before presenting a list of potential panelists to the parties involved. Additionally, the amendments mandate that a FINRA director must furnish a written explanation for any decision regarding a party's request to remove an arbitrator from the selection list, with such determinations required before the initial hearing session.
Furthermore, the revisions introduce provisions for streamlined single-arbitrator panels for cases involving damages under $50,000 and officially endorse virtual pre-hearing sessions. As reported by AdvisorHub, these changes received approval from the Securities and Exchange Commission.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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