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October 3rd, 2016
securities
FINRA’S RECOMMENDATIONS FOR EXPEDITED ARBITRATIONS

 FINRA allows for expedited arbitration proceedings in cases involving senior and seriously ill parties.  While there is no specific rule within the Code of Arbitration Procedure, once FINRA determines that a matter involves an elderly or ill party, the case is flagged as an expedited case.  FINRA then endeavors to complete the arbitration process as quickly as possible.  FINRA recently formed a committee to determine how to process expedited cases more efficiently.  

            The committee modified FINRA’s internal reports to help case administrators identify expedited cases and get them on the expedited track more quickly.  The committee also created an Expedited Procedures Stipulation.  The Stipulation allows parties to agree to reduce the deadline to submit arbitrator ranking forms, waive the required 20-day notice of the Initial Pre-Hearing Conference (“IPHC”), provide mutually agreeable hearing dates and direct FINRA to appoint arbitrators who are available on the parties’ agreed hearing dates.

            The committee cannot change the time requirements of the Code of Arbitration Procedure; however, it suggests that arbitrators can enforce certain deadlines.  For discovery deadlines, arbitrators are encouraged to set a discovery cut-off as close to the IPHC as possible and set the deadline for discovery motions no more than three months after the IPHC.  Arbitrators are also encouraged to schedule the final hearing within six months from the IPHC, instead of the standard nine months. 

            FINRA notes that it intends for these measures to speed the processing of such cases, while still maintaining procedural balance and fairness for all parties.  However, FINRA’s expedited procedures process remains confusing and unclear.    

For instance, FINRA does not define “elderly” or “seriously ill” and does not appear to have a process in place to determine whether a claimant qualifies for the expedited track.  Further, there are no procedures in place to challenge a case that has been flagged as expedited, other than to argue to the arbitrators that strict deadlines should not be implemented.

            Because there are many unresolved issues, we anticipate FINRA will seek in the future to more precisely define what an expedited case entails and how a party can challenge it.  We recommend that our clients be aware of FINRA’s current position on these cases and keep in mind the strict deadlines if involved in a case that is on an expedited track.  

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