Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, July 29, 2011

FINRA Arbitration Rule Would Broaden Arbitrators' Authority to Make Disciplinary Referrals

FINRA recently filed with the SEC a proposed rule change to amend Rule 12104 of the Code of Arbitration Procedure for Customer Disputes (“Customer Code”) and Rule 13104 of the Code of Arbitration Procedure for Industry Disputes (“Industry Code”) to broaden arbitrators’ authority to make referrals during an arbitration proceeding.  Currently, Rule 12104(b) of the Customer Code and Rule 13104(b) of the Industry Code state, in relevant part, that any arbitrator may refer to FINRA for disciplinary investigation any matter that has come to the arbitrator’s attention during and in connection with the arbitration only at the conclusion of an arbitration.  As FINRA explains, "in light of well publicized securities frauds that resulted in harm to investors, FINRA has reviewed the Customer and Industry Codes (together, Codes) and determined that its rules on arbitrator referrals should be amended to permit arbitrators to make referrals during an arbitration proceeding, rather than solely at the conclusion of a matter as is currently the case." 

http://lawprofessors.typepad.com/securities/2011/07/finra-arbitration-rule-would-broaden-arbitrators-authority-to-make-disciplinary-referrals.html

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