FINRA’s Dispute Resolution Task Force issued its Final Report in mid-December. The Report reflects the group’s consideration of wide-ranging issues affecting the nation’s principle dispute-resolution forum for broker-dealers, their associated persons and customers. The Task Force made 51 recommendations for changes to FINRA Arbitrations, including:

Improve Arbitrator Quality by:

  • Increasing compensation;
  • Improving recruitment for depth and diversity;
  • Improving selection to provide a pool of 30 in all-public arbitrator cases; achieve earlier and better conflict disclosure, including multiple-appointment conflicts; allow appropriate voir dire;
  • Improving arbitrator training content and frequency.

Encourage Explained Awards by making them mandatory subject to one-party veto, with required Chair training on writing them.

Tighten Expungement Proceedings by creating a pool of trained, experienced arbitrators to handle expungement requests in settled cases and those not naming AP’s; increasing training and guidance overall; and reviewing state-regulator notification of requests.

Small Claims: Develop an intermediate form of adjudication for expedited hearing before an arbitrator that provides parties an opportunity to explain their positions and respond to their adversary.

Mediation: Make mediation automatic for all arbitration cases, subject to single-party opt out, with financial incentives that refund some fees for successful mediations. Greater mediator training and recruitment.

Motions to Dismiss: Amend Rule 12504(a) to add res judicata as a permissible basis for prehearing motion to dismiss.

Case Management – Procedural Issues

  • Ensure expedited hearings really are.
  • Discourage last-minute arbitrator recusals.
  • Add insurance policies to firm discovery guidelines.
  • Revise IPHC script to emphasis parties may modify hearing procedures, including the use of any type of technology, and strongly discourage the practice of phantom retention of experts.
  • Revise FINRA’s party portal to allow real-time tracking of costs.

Public Availability of Information

  • Improve the informational content of awards
  • Add substantive decisions, such as injunctive orders or final dismissals, to FINRA’s Arbitration Awards Online database.

The Task Force Report is here.