Friday, April 30, 2010
FINRA Proposes to Increase Number of Arbitrators Available for Selection
FINRA announced that it intends to increase the number of arbitrators available for selection when parties pick arbitration panels, to 10 from the current eight, for each type of arbitrator on a three-member panel – public chair-qualified, public and non-public. Lists of available arbitrators for cases involving less than $100,000, which are heard by a single, chair-qualified public arbitrator, would also expand from eight to 10 names.
The proposed expansion, made in a recent rule filing with the Securities and Exchange Commission (SEC), is designed to increase the likelihood that all arbitrators appointed to a case will have been selected by the parties. A frequent complaint of both claimants' and respondents' attorneys is that the lack of mutually agreeable names means that FINRA ends up filling the panel through random selection. In those instances, the arbitrator can be striken only for cause.
While the proposed change would increase the number of arbitrators on each list by two, the number of available strikes would remain at four per party. If the SEC approves the new procedure, it would ensure that at least two proposed arbitrators will remain on each list of 10 potential arbitrators – thus significantly increasing the likelihood that the parties will get panelists they chose and rank, as opposed to extended list appointments. It would also reduce the need for extended list appointments when vacancies occur in a panel later in a case.