WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today issued two Regulatory Notices requesting comment on two proposals related to its arbitration program: a proposal to expand the options available to investors when filing a claim in arbitration against an inactive firm or associated person, and a second proposal related to compensated non-attorney representatives that provide public investors an alternative to representation by attorneys in disputes between investors and broker-dealers.
FINRA is proposing to expand the options available to customers in situations where a firm or associated person is no longer in business either at the time the claim is filed or during a pending arbitration. Regulatory Notice 17-33 proposes amendments to FINRA’s arbitration rules to allow customers to withdraw an arbitration claim, amend pleadings, postpone hearings, and receive a refund of filing fees under these situations.
Similar to the current rules and procedures relating to claims filed against firms no longer in business, the proposed amendments would allow customers to evaluate the likelihood of collecting on an award and make an informed decision about whether to proceed in arbitration, to file the claim in court or to amend his or her claim to add other respondents from whom the customer may be able to collect should the claim go to award.
Richard Berry, Executive Vice President, FINRA Office of Dispute Resolution, said, “FINRA is committed to continuously reviewing its arbitration program to improve the quality of arbitration and ensure the integrity of the arbitration process. The proposed amendment is intended to help further address the issue of unpaid customer arbitration awards by expanding the options available to customers.”
FINRA is also conducting a review of the efficacy of continuing to allow compensated non-attorney representatives (NAR firms) to represent customers in arbitration. The Dispute Resolution Task Force in its Final Report and Recommendations recommended that FINRA conduct a study to determine, among other matters, whether NAR firms are performing competently. Regulatory Notice 17-34 seeks responses to questions related to forum users’ experiences with NAR firms.
“While NAR firms provide service to public investors with small claims, among others, some of the alleged inappropriate business practices reported to FINRA raise serious concerns,” Berry said. “Therefore it is prudent for FINRA to consider the representation of parties by NAR firms.”
FINRA is dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. Supervised by the SEC, FINRA writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. To see if your investment professional is regulated by FINRA, please go to BrokerCheck. And for more information, visit www.finra.org.