This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.
FINRA’s Board met in mid-December and among other matters approved changes to the arbitrator listing process. FINRA’s Board of Governors met in person December 14 – 15.
As reported in SAA 2022-47 (Dec. 15), the agenda had a somewhat mysterious dispute resolution-related item: “review amendments to the Codes of Arbitration Procedure to make various clarifying, technical and procedural changes.” At that time we were stumped as to what this meant.
Clarity Provided by FINRA …
The post-meeting memo sheds further light on the subject:
“The Board approved the submission to the SEC of proposed amendments to the Codes of Arbitration Procedure to make clarifying, technical and procedural changes to the arbitrator selection process. The amendments would codify current practices and guidance relating to arbitrator selection and increase selection opportunities for public arbitrators who are not chair-qualified” (emphasis added).
While this description is still somewhat cryptic, we have a good read on the highlighted planned changes to the arbitrator list selection process.
… and the Alert
In a letter to the editor published in SAA 2022-48 (Dec. 22), Dispute Resolution Services’ Associate Director, Recruitment and Training, Nicole Haynes said:
“In addition to current recruitment efforts to bolster the forum’s neutral roster, in 2023, FINRA will propose changes to the arbitrator selection process to provide new and more diverse public arbitrators with greater opportunities to serve. Currently, public chairpersons have two opportunities to appear on a list. Chairpersons not appointed to the chairperson list also appear in the public arbitrator pool along with the public arbitrators in each hearing location for possible inclusion on the list, thereby giving eligible public chairpersons an advantage. To correct this imbalance, the proposal would provide non-chair qualified public arbitrators with two opportunities to appear on the public list. Chair-qualified arbitrators would have one opportunity to appear on the public list, as they already had one opportunity to be selected on the chairperson list. The goal of the proposal is to provide new and more diverse public arbitrators with greater opportunities to serve, to gain experience and ultimately become eligible to join the chairperson roster.”
And … Early Release of Regulatory Targets
The Board also previewed the 2023 Report on FINRA’s Examination and Risk Monitoring Program, “which will provide firms with insight into findings from recent oversight activities of FINRA’s Regulatory Operations to help inform the development and operation of firms’ compliance programs.” The memo added that FINRA plans to release the report early in the new year, which is much earlier than in recent years.
(ed: *This would be a good rule change. We’ll be on the lookout for a Reg Notice seeking comments, or a rule filing with the SEC. **This was the last meeting for 2022. Next year’s schedule is: March 9–10; May 17–18; July 12–13; September 13–14; and December 6–7.)