On July 23, the Financial Industry Regulatory Authority (FINRA) released Regulatory Notice 18-21, which summarizes recent amendments to the Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code).
The Codes offer two options for administering cases that have claims of $50,000 or less (excluding interest and expenses). In the default option, a single arbitrator makes a decision based on the parties’ pleadings and other materials submitted by the parties. Alternatively, the parties have a full hearing with a single arbitrator. Under the Customer Code, a customer may request a hearing, regardless of whether the customer is a claimant or respondent. Under the Industry Code, only the claimant may request a hearing. Hearings are generally held in person, and there are no limits on the number of hearing sessions.
Claimants can now select a third hearing option known as a “Special Proceeding” for cases involving claims of $50,000 or less (excluding interest and expenses), which is designed to give parties an opportunity to present cases to an arbitrator in a convenient and cost-effective manner. A Special Proceeding is held by telephone and limits the time parties can present their cases, rebuttals and closing statements. FINRA expects that arbitrators will follow the usual order of proceedings.
Notice 18-21 is available here.