In arbitration, however, instead of presenting their case to a judge and a jury, investors present their case to a Panel of arbitrators. Approximately 30 days after Respondent files its Answer, the parties receive a “randomly” selected list of arbitrators. The parties select their arbitrator choices these lists based on Arbitrator disclosure information provided by FINRA. According to the Code of Arbitration Procedure, each separately represented party may strike up to four of the arbitrators from each list for any reason.
These arbitrators, in FINRA securities arbitrations, have undergone certain training to be eligible arbitrators. Arbitrators are typically lawyers, business persons, accountants, former judges, and others. In connection with the arbitration process, the parties are provided a list of typically thirty (30) arbitrators, together with a summary of their educational and occupational background and prior awards that they have rendered.
On July 24, 2008, FINRA announced a voluntary two-year Public Arbitrator Pilot Program (Pilot Program), which allows investors in three-arbitrator cases naming only a participating firm to have a panel consisting of three public arbitrators, instead of two public arbitrators and one non-public arbitrator.
On February 1, 2011, customers in FINRA securities arbitrations were given the option to choose an all public arbitration panel in all cases with three arbitrators. As of December 2014, FINRA’s national roster of qualified arbitrations includes 3,527 public arbitrators and 2,834 non-public or securities industry related arbitrators.
Code of Arbitration Procedure
Under the FINRA Code of Arbitration Procedure, before appointing arbitrators to a panel, the Director of FINRA Securities Arbitration will notify the arbitrators of the nature of the dispute and the identity of the parties. Each potential arbitrator must make a reasonable effort to learn of, and must disclose to the Director, any circumstances which might preclude the arbitrator from rendering an objective and impartial determination in the proceeding, including: (1) Any direct or indirect financial or personal interest in the outcome of the arbitration; (2) Any existing or past financial, business, professional, family, social, or other relationships or circumstances with any party, any party’s representative, or anyone who the arbitrator is told may be a witness in the proceeding, that are likely to affect impartiality or might reasonably create an appearance of partiality or bias; (3) Any such relationship or circumstances involving members of the arbitrator’s family or the arbitrator’s current employers, partners, or business associates; and (4) Any existing or past service as a mediator for any of the parties in the case for which the arbitrator has been selected.
The Arbitrator’s Manual, specifically provides that: “[t]he arbitrators should avoid even the appearance of impropriety.”
Initial Pre-Hearing Conference
After the arbitrators are appointed by FINRA, based upon the respective selections or rankings of the arbitrators by the parties, an Initial Pre-Hearing Conference is conducted by the Panel, by telephone with counsel for the respective parties, where final hearing dates and other important dates, including the dates to file motions, or other matters, are scheduled.
Once the arbitrators are appointed to a Panel, the arbitrators can only be removed for cause of the failure to disclose any conflicts as set forth above.
Within approximately 30 days from the last final hearing session, the Arbitration Panel renders an Award.
Guiliano Law Firm
The Guiliano Law Firm, P.C. is headquartered in Philadelphia, Pennsylvania. Our practice is multi-jurisdictional or national, where permitted by law, and substantially limited to the representation of investors for fraud, the sale of unsuitable investments, breach of fiduciary duty, and other forms of misconduct against brokerage firms, their agents, and other investment professionals.