FINRA Requests Comment on the Efficacy of Allowing
Compensated Non-Attorneys to Represent Parties in
FINRA Rules do not prohibit non-attorneys from representing parties in arbitrations, although some states do have such a prohibition. While there are some representatives who provide competent advise to parties, there have been a number of issues over the years regarding these non-attorneys.
FINRA is now reviewing this policy and is seeking comment from members and interested parties regarding the use of non-attorneys in arbitrations.
The Regulatory Notice discussing the issue is 17-34.
Interested parties can submit their comments using
the following methods:
0 Emailing comments to firstname.lastname@example.org.
Read the entire notice before submitting a comment, and please note that the Comment Period Expires December 18, 2017
FINRA has filed a proposed rule change to provide that an attorney arbitrator would be eligible for the chairperson roster if he or she completes chairperson training and serves as an arbitrator through award on at least one arbitration, instead of two arbitrations, administered by a self-regulatory organization (“SRO”) in which hearings were held.
Proposed Rule Change: Broadening Chairperson Eligibility in Arbitration
On September 30, 2016, FINRA published a status report detailing the progress on the FINRA Dispute Resolution Task Force recommendations. As of October 19, 2016, FINRA’s Office of Dispute Resolution (ODR) staff had discussed all of the recommendations with the National Arbitration and Mediation Committee (NAMC), FINRA’s Board Advisory Committee on the dispute resolution forum.
The report is available at the FINRA Dispute Resolution website.
From the Securities Arbitration Commentator:
“The Centers for Medicare and Medicaid Services has issued final regulations banning nursing homes and long-term care facilities receiving federal funds from using mandatory predispute arbitration agreements.”
Feds Ban PDAAs at Federally Funded Nursing Home Facilities:
FINRA’s recent rule change, which effectively removed every attorney with any relevant securities experience from serving as a Chairperson might be negatively effecting the Chairperson roster.
As we discussed in a posting in March, Customer and Firm Attorneys are No Longer Public Arbitrators, since the Chairperson must be a public arbitrator, most securities attorneys were instantly disqualified from serving as a Chairperson. While FINRA’s roster still contains many extremely qualified Chairpersons, the impact on the arbitrator pool has been significant, and placed additional burdens on the remaining qualified Chairpersons.
FINRA has finally filed a proposed rule change to amend the Code of Arbitration Procedure for both Customer and Industry Disputes which it was discussing back in May of this year. It is proposing to change the rule to provide that an attorney arbitrator would be eligible for the chairperson roster if he or she completes chairperson training and serves as an arbitrator through award on at least one arbitration, instead of two arbitrations, administered by a self-regulatory organization in which hearings were held.
This is probably not going to make a significant difference in the Chairperson pool, but it is a start.
SR-FINRA-2016-033 | FINRA.org
The amended arbitrator definitions in FINRA Rules 12100 and 13100 of the Customer and Industry Codes of Arbitration Procedure became effective June 26, 2015.
The amended definitions provide, among other matters,that persons who worked in the financial industry for any duration during their careers will always be classified as non-public arbitrators, and persons
who represent investors or the financial industry as a significant part of their business will also be classified as non-public, but may become public arbitrators after a cooling-off period.
The changes, pushed primarily by the bar association of attorneys who represent investors, had the effect of removing a significant number of attorneys from the “public” panels, which resulted in s significant decline in the number of legally trained chairpersons.
Based on the revised arbitrator definitions, a significant number of public arbitrators were either reclassified as non-public or became temporarily ineligible to serve on the roster. As of July 6, 2015, our data show that:
● 13.8 percent (487 out of 3,512) of the public roster were reclassified as non-public arbitrators;
● 2.6 percent (93 out of 3,512) of the public roster became temporarily ineligible to serve as either public or non-public arbitrators; and
● 6.2 percent (221 out of 3,512) of the public roster were removed for failing to return the survey.
FINRA’s Neutral Corner, Volume 3, 2015
After years of trying to remove anyone with a past relationship with the securities industry from serving on FINRA arbitration panels as public arbitrators, customer attorneys have
succeeded. The SEC has approved a rule classifying arbitrators with former industry relationships as public arbitrators.
The rule also classified attorneys who spend more than 20% of their time representing customers against the industry as non-public arbitrators.
See the commentary at The Securities Law Blog