FINRA Makes Changes to Panel Composition
- United States
- 08/28/2008
In the past, arbitration panels were composed of two public arbitrators and one industry arbitrator. Parties are provided lists of proposed arbitrators along with background information to assist the parties in selecting the panel through a confidential ranking process. The majority of arbitrations will continue to use this panel composition and ranking process. However, in the past three weeks FINRA announced two changes that will affect panel composition. The first is a pilot program that will give investors the option of having a panel free of the industry arbitrator, i.e., an all public arbitrator panel. Proponents of the pilot program think it lessens the perception that investors are disadvantaged by the SRO arbitration process. Finally, in the wake of auction rate securities fall-out, FINRA announced a special process for resolving auction rate securities-based claims. Investors will have the option to select a three-person panel where the industry panelist, nor the public panelist for that matter, would be affiliated with a firm that recently sold auction rate securities. Impact from these changes to potential panel composition is unknown at this stage. Contact Lindsey R. Trowell for more information.
