News & Insights

Finra Seeks Comment On Proposed Amendments To Firm And Associated Persons Document Production List

FINRA is requesting comment on proposed amendments to the Firm and Associated Persons Document Production List and Discovery Guide. The proposed amendments to the Discovery Guide require firms and associated persons, upon request, to produce documents concerning third-party insurance coverage in a customer arbitration proceeding. These proposed amendments would strictly limit the circumstances under which insurance coverage information could be presented to the arbitrators.

The amendments add a new list item regarding the production of information relating to insurance policies obtained through third-party carriers. FINRA states that it believes it is important to address the industry concern that firms with sufficient capital to pay arbitration awards should not be required to produce insurance information automatically in every arbitration case. For this reason, FINRA is proposing to require a party seeking the production of insurance information to expressly request that an opposing party produce insurance information.

Specifically, the new list item would require firms and associated persons, upon request, to produce documents sufficient to provide details concerning the coverage and limits of any insurance policy regarding a named party under which any third-party insurance carrier might be liable to satisfy in whole or in part an award issued by an arbitrator in the subject arbitration proceeding or to indemnify or reimburse a party for payments made to satisfy an award. The new list item would state that it may be prejudicial for arbitrators to be given information related to the coverage or lack of coverage by liability insurance. FINRA states that it will train arbitrators to address potential prejudice and that any party wishing to submit evidence at a hearing relating to insurance must demonstrate to the arbitration panel that: (1) there are extraordinary circumstances warranting admission of the insurance information; or (2) the existence of an insurance policy is directly related to the dispute outlined in the statement of claim. The party must seek express authorization from the arbitration panel to submit the evidence.

FINRA believes that the proposed amendments might result in fewer customer motions to compel production of insurance information and more consistent arbitrator rulings on the subject of insurance and expects that the parties to exchange the documents without arbitrator or staff intervention.  It appears that this is once again a push by the Claimants as insurance issues should not be in front of the arbitrators at all, since arbitrators serve in the role of judge and jury.

We encourage our clients to object to the proposed amendments regarding FINRA’S Discovery Guide to review Regulatory Notice 18-22,, and submit their comments to FINRA by September 24, 2018.