Securities Law Prof Blog

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

Sunday, September 28, 2008

FINRA Proposes Increase in Amount for One-Arbitrator Cases

FINRA announced it has filed a proposed rule change with the SEC to have investor cases with claims of up to $100,000 in dispute heard by a single public arbitrator, an increase from $50,000.  One arbitrator would be assigned to cases involving $25,000 to $100,000, under the proposal, unless all parties in arbitration agree to a three-person panel. Claims of $25,000 or less would continue to be heard by a single arbitrator, while three would continue to be assigned to cases involving more than $100,000 in dispute.

If approved, the new rule is estimated to double the percentage of cases heard by a single arbitrator - from approximately 17 percent to 34 percent - and would restore this figure to what it was when the three-arbitrator threshold was last increased in 1998.

The proposed threshold change comes during a rise in the number of arbitration claims filed with FINRA Dispute Resolution. Through mid-September 2008, FINRA has received 3,203 arbitration case filings, compared to 2,226 cases for the same period in 2007, a 44 percent increase. Claims initiated by customers have increased by 67 percent during this period.

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