SR-FINRA-2016-033 – The Good and the Bad

By Geoff Hafer, Fall 2016 Student Intern

In part two of this five-part series, we dug into the meat of SR-FINRA-2016-033 and the reasoning behind the change.  So let’s turn now to SR-FINRA-2016-033 The Good and the Bad.

First, the good.  As previously mentioned, the public chairperson roster in each hearing location was reduced significantly with the change to the “public arbitrator” definition.  Forum users expressed concern with the inconvenience of scheduling hearings with out-of-town arbitrators due to the limited pool of public chairpersons.  Reducing the case experience requirement from two arbitrations to one arbitration “could add more than 270 attorney arbitrators across 59 of the 71 hearing locations, resulting in a nearly 30 percent increase in the number of arbitrators who might be eligible to serve as public chairpersons once they take chairperson training” according to FINRA.  More arbitrators, less traveling, sounds like a winner to me, right?

Now, the bad.  Although reducing the case experience requirement from two arbitrations to one arbitration may not sound like much, it is quite significant in the exposure that arbitrators have to live proceedings.  The underlying rationale for having a chairperson roster is to ensure that, at minimum, one of the arbitrators on a panel has experience in procedural and substantive issues that arise in arbitration proceedings.  This is especially true when, as in all of the Investor Advocacy Clinic at Georgia State University College of Law clients’ claims, the claim will be heard by only one arbitrator.  For claims less than $50,000 up to $100,000, one arbitrator will be selected from the public chairperson roster.

Well, you might say, “Geoff, the rule also states that in order for an arbitrator to serve as a public chairperson, they must complete chairperson training.  Seems like that training should do the trick, right?”  In part four of this five-part series, we will explore current chairperson training.