Intra-Industry Arbitrations

One certainty in the brokerage world is that registered representatives often switch from one member firm to another. There is nothing wrong with the switch, but there is a word of caution to be shared.

Before you leave, make sure you only have in your possession, if anything, only those things that the firm

The SEC recently approved a FINRA proposal that will further restrict who can serve as “public” arbitrators. Under this new formulation, individuals who have worked in the securities industry and lawyers, including those who represent claimants, could not be considered “public” arbitrators for a period of time.

The big change under this new rule, is

Brokers like anyone else enjoy making money the old fashioned way  . . . . by inheriting it.  Although everyone wants to inherit business, a recent Investment News article highlighted the pitfalls associated with agreements to acquire the business of a retiring broker. confusion.jpg

Indeed, intra-industry disputes, such as those involving the acquisition of a book

As a result of a couple high profile awards that were overturned because of issues with the arbitrators, FINRA has vetted its pool of arbitrators and has instituted new procedures to review arbitrators. Should you feel any better that this has happened?

Having defended broker-dealers and registered representatives over 16 years, I have, at times,

Both the industry and customers liked FINRA arbitration because it was a relatively cost effective dispute resolution forum.  With FINRA Notice to Members 13-21 and effectively doing away with having an industry person on the panel, FINRA has just made arbitration more expensive for everyone.

Without any industry presence on the panel, both customers and

This past week, members of the North American Securities Administrators Association lobbied Congress to do away with mandatory arbitration provisions from customer agreements.  In a speech before this group, SEC Commissioner Aguilar expressed that mandatory arbitration agreements must go.  Would this be a bad thing?

Arbitration has be seen as the preference of the industry

The SEC agreed to a proposed change to the Financial Industry Regulatory Authority’s arbitration rules relating to subpoenas and orders directed towards non-party FINRA members and their associated persons.  See Release No. 34-68404; File No. SR-FINRA-2012-041 (December 11, 2012), and http://www.finra.org/Industry/Regulation/RuleFilings/2012/P158171

These new rules will allow FINRA arbitrators to issue orders for the appearance of witnesses