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November 1st, 2018
securities
FINRA ESTABLISHES A PER ARBITRATOR FEE AND HONORARIUM FOR LATE CANCELLATION OF PREHEARING CONFERENCES

The SEC approved amendments to FINRA’s customer and industry arbitration rules to charge parties who request cancellation of a prehearing conference within three business days of the prehearing conference a $100 per-arbitrator fee. The amendment also provides for a $100 honorarium to each arbitrator scheduled to attend the cancelled prehearing conference.

The fee applies even if the parties agree to cancel the prehearing conference.  If the parties do not agree to a fee allocation, the arbitrators will have discretion to allocate the fee among the parties.  The arbitrators will also have the discretion to allocate the fee to the non-requesting party if the arbitrators determine that the non-requesting party caused or contributed to the need for the cancellation.  However, in the event that an extraordinary circumstance prevents a party or parties from making a timely cancellation request, the arbitrators may use their discretion to waive the fee, provided a written explanation is given.

Prior to the amendments, parties could cancel prehearing conferences up to and including on the same day without penalty (unlike postponements of arbitration hearings).  The reason for the change was to avoid scheduling inconvenience for arbitrators, uncompensated work, and operational challenges for FINRA staff who generally must quickly notify arbitrators about cancellations.  The amendments are effective for cases filed on or after October 29, 2018.
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