FINRA has launched a pilot program for arbitrating claims of more than $10 million. Approximately 200 such arbitrations are currently pending. While parties have been able to modify many aspects of FINRA’s standard arbitration procedures, the pilot program now offers a more formal approach for tailoring a set of rules to the parties’ particular case. At the beginning of each case, FINRA will appoint a specially trained and experienced case administrator o assist the parties with developing a plan for administrating the case. The parties can agree to deviate from some of FINRA’s standard procedures, including:

  • arbitrator qualifications and method of selection (off-roster arbitrators being acceptable);
  • motion practice;
  • official record of proceedings;
  • hearing facilities; and
  • explanation of decisions.

The parties can also agree to use any forms of discovery that would be available in litigation, including interrogatories, requests for production, depositions (which FINRA’s standard rules usually permit only in rare circumstances), and requests for admission. The pilot program also provides for a discovery arbitrator, if the parties so choose, whose only role would be to rule on discovery disputes.

Participation in the program is voluntary and comes with additional costs such as a $1,000 administrative fee for each party, higher rates for the arbitrators, and additional costs for hearing facilities. Because the pilot program more closely resembles full-blown litigation (without all the procedural safeguards) than the streamlined arbitration process many have come to know, it will be interesting to see how many participants the program attracts.