Securities Law Prof Blog

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

Tuesday, July 19, 2011

FINRA Plans to File Arbitration Code Amendment Not Allowing Arbitration of FLSA Collective Claims

At a recent FINRA Board of Governors meeting, the following actions were taken:

Arbitration Claims Involving Fair Labor Standards Act
The Board considered a proposed amendment to Rule 13204 of the Code of Arbitration Procedure for Industry Disputes to add collective action claims brought under the Fair Labor Standards Act or the Age Discrimination in Employment Act so that such claims may not be arbitrated under the Industry Code. While this had always been our interpretive position, the rule proposal responds to an adverse court decision.
The Board authorized staff to file the proposed amendments with the Securities and Exchange Commission (SEC).

DPP/REIT Account Values
The Board considered amendments to the customer account statement rule to revise the manner in which broker-dealers report estimated per share values of nontraded REITS and direct participation programs on their customer account statements. The proposed amendments would (1) require, if par value is shown, that it be netted by the up-front fees and expenses that are deducted from the offering proceeds, (2) permit broker-dealers to use par value only under the initial offering period, and not during a second offering period, and (3) clarify that if the broker-dealer has reason to believe that the estimated per share value in the annual report is inaccurate, then the broker-dealer must remove that value from its account statements.
The Board authorized staff to issue a Regulatory Notice requesting comment on the proposed amendments

Other Regulatory Action | Permalink

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