FINRA Reforms Arbitrator Picks for Faster Finance Fights
Published Date: 3/14/2025
Notice
Summary
FINRA wants to tweak how arbitrators are picked for certain financial dispute cases to give more chances to public arbitrators who aren’t chair-qualified. They’re also setting clearer rules on timing for asking questions, withdrawing info requests, and removing arbitrators. These changes affect anyone involved in FINRA arbitration and could speed up the process without extra costs, with a decision expected by March 28, 2025.
Analyzed Economic Effects
8 provisions identified: 5 benefits, 1 costs, 2 mixed.
Stricter enforcement of ranked-list deadline
FINRA would codify that after striking and ranking arbitrators, parties must return ranked lists within 20 days, and 'absent extraordinary circumstances,' the Director will not grant extension requests filed after the deadline has elapsed.
More chances for non-chair public arbitrators
For three-arbitrator cases, the list-selection algorithm will give public arbitrators who are NOT chair-qualified two chances to be selected for the public list, while chair-qualified public arbitrators will get one chance. An individual arbitrator still cannot appear more than once on the public list.
Faster delivery of arbitrator lists (30→20 days)
FINRA would shorten the rule timing for sending the arbitrator lists to parties from approximately 30 days after the last answer is due to 20 days. The change is reflected in proposed Rules 12402(c)(1), 12403(b)(1), and 13403(c)(1).
Full post-education employment disclosures
FINRA would remove the phrase 'for the past 10 years' and instead provide each arbitrator's full post-education employment history and other background information in a disclosure report to the parties.
New rules for requesting arbitrator information
A party may request additional information about an arbitrator at any stage of the proceeding and may omit information that would reveal the identity of the requesting party. Opposing parties may object within ten days of receipt; the Director will forward the request and any objections to the arbitrator after five days have elapsed from service of objections, provided the request has not been withdrawn. The Director may toll the time for parties to return ranked lists when additional-information requests are pending.
Strike non-public arbitrators for any reason
The proposed rule would amend Rule 12403(c)(1)(A) to expressly provide that each separately represented party may strike any or all arbitrators from the Non-Public List 'for any reason.'
When parties can agree to remove arbitrators
The Director may remove an arbitrator at any stage if all named parties agree in writing to the arbitrator's removal. However, parties may not agree to remove an arbitrator who is considering a request to expunge customer dispute information, except that a party may still challenge such an arbitrator for cause under specified rules.
Limits and remedy for disclosing removal challenges
The proposed rules would prohibit a party from informing the panel or arbitrator of another party's causal challenge. If such a disclosure occurs, the party who requested removal may file a written motion for removal with the Director within five days of being made aware of the disclosure; failure to file within five days forfeits the opportunity. Absent extraordinary circumstances, the Director shall grant such a motion.
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