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A Better Partnership


Apr 2012
April 10, 2012

FINRA Proposes Rule Changes Expanding the Scope of Simplified Arbitration

FINRA recently filed proposed rule changes with the SEC regarding the simplified arbitration procedures contained in the Customer and Industry Codes of Arbitration Procedure.  The proposed rule changes raise the limit for simplified arbitration from $25,000 to $50,000 and provide a more streamlined arbitration process for a larger scope of arbitration claims.

Currently, Rules 12401 and 12800 of the Customer Code and Rules 13401 and 13800 of the Industry Code provide for simplified arbitration procedures for any claims where $25,000 or less, exclusive of interest and expenses, is at issue.  Among other differences, the simplified arbitration procedures set out that one, rather than three, arbitrators will be appointed to decide the claim, the claim will be decided without a hearing based on the written materials submitted by the parties, unless the customer in a customer case or the claimant in an industry case requests a hearing, and the discovery procedures are more streamlined.  If FINRA’s proposed rule changes are approved, the $25,000 threshold will be increased to $50,000 and an increased number of claims will be subject to the simplified arbitration procedures.

According to the FINRA materials regarding this rule proposal, FINRA’s purpose in proposing these rules changes is to reduce the costs and fees associated with pursuing a FINRA claim and make the arbitration process more inexpensive and less burdensome for claimants raising small dollar claims.  The proposed rule changes are currently before the SEC but have not yet been approved.

If you have questions regarding FINRA’s proposed rule changes or the arbitration procedures, feel free to contact me.

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