The Financial Industry Regulatory Authority (FINRA) has proposed giving investors filing arbitration claims the option of having an all-public arbitration panel, significantly increasing investor choice in the FINRA arbitration program. The proposal will be filed next month for approval with the Securities and Exchange Commission (SEC).
According to FINRA’s Chairman and Chief Executive Officer, Richard Ketchum,”Giving each individual investor the option of an all-public panel will enhance confidence in and increase the perception of fairness in the FINRA arbitration process. All investors will have greater freedom in choosing arbitration panels, and any investor will have the power to have his or her case heard by a panel with no industry participants.”
If approved by the SEC, the rule allows investors to either choose an arbitration panel consisting of two public arbitrators and one non-public arbitrator (the current option), or having an all-public panel. A non-public arbitrator is generally one associated with the financial services industry.
The proposed rule would apply to all investor disputes against any firm and any individual broker. It would not apply to arbitration disputes involving only industry parties.