The Financial Industry Regulatory Authority has amended its arbitrator selection process in an effort to enhance the transparency of the arbitration forum administered by FINRA Dispute Resolution Services.
FINRA has amended its Codes of Arbitration Procedure to:
- change the arbitrator list selection process
- clarify and make technical changes to requirements in the codes for holding prehearing conferences and hearing sessions, initiating and responding to claims, motion practice, claim and case dismissals, and providing a hearing record.
The amendments are effective for arbitration cases filed on or after March 4.
The rule change, filed with the Securities and Exchange Commissionon Dec. 23, is in response to recommendations made last June by Lowenstein Sandler, which conducted an independent review of FINRA's arbitrator seclection process after an arbitration decision in favor of Wells Fargo was thrown out in court.
The judge found that Wells Fargo and its counsel had manipulated the arbitrator selection process through an agreement with FINRA.
