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New Arbitration Task Force to Assess FINRA Arbitration Processes

Friday, July, 25, 2014

The Financial Industry Regulatory Authority (FINRA) has announced the formation of a 13-member Task Force to review and propose enhancements and improvements to FINRA’s current securities arbitration forum.


The task force includes seven public and six private members, including representatives for investors, regulators, academics, and bankers and brokers in order to ensure that the FINRA arbitration process adequately protects investors and boosts confidence in the markets, all of which is part of FINRA’s chartered goals.


The task force will take a year to investigate and review the current arbitration model used by FINRA, and then will present recommendations to the National Arbitration and Mediation Committee (NAMC) in 2015.  The recommendations will not be binding and it will be up to the NAMC to compel any changes to FINRA’s processes based on them.


The arbitration process is the main avenue for settling grievances and attaining compensation in the securities world, and recent changes to FINRA’s policies, federal law, and the contractual language between brokers and investors has made arbitration the most common and effective way to settle disputes in the modern financial world.  This has put unprecedented stress on FINRA’s arbitration mechanisms in recent years, which haven’t been overhauled or significantly revised in years.


The task force includes representatives from the University Of Cincinnati College Of Law, the Alabama Securities Commission, existing FINRA arbitrators, the Consumer Federation of America, Citigroup, Morgan Stanley Wealth Management, as well as several private law firms involved in the securities industry.