// Add the new slick-theme.css if you want the default styling
The SEC approved a proposed rule
change to amend FINRA Rules 12402 and 12403 of the Customer Code and Rule 13403
of the Industry Code to allow the Director of FINRA’s Office of Dispute
Resolution (“Director”) to send the list generated by the Neutral List
Selection System to all parties at the same time, within 30 days after the last
answer is due. The list will now be sent
within this time, regardless of whether the parties agree to extend any answer
due date.
Prior to the change, the Rules
stated the Director would wait until after the last answer was due to send the
list of arbitrators to the parties. If
there are multiple respondents to an arbitration and they are added at
different times, each respondent would have a different answer due date,
thereby delaying when the list was sent out to the parties. Likewise, if the parties had agreed to extend
the deadline for when the answer was due, the Director would use the new date
as the last answer due date for sending the list.
The former Rules would often delay
arbitrations longer than intended by FINRA.
FINRA proposed the amendment in an effort to appoint arbitrators earlier
and schedule earlier initial pre-hearing conferences. The SEC agreed with FINRA finding that the
proposal will help protect investors and the public interest by streamlining
the arbitration process by concluding the arbitrator selection process at an earlier
date.
Our clients should be aware that
this change in FINRA Rules could result in selection of arbitrators before a
respondent even files its answer, especially if claimant provides an extension
to the answer deadline. The list
selection is due by the parties within 20 days of receipt; however, there is
currently nothing in the FINRA Rules that would prevent the parties from
agreeing to extend this time frame if necessary.