Hearings

Location: Cases Involving Investors

The Director will decide which of FINRA's hearing locations will be the hearing location for the arbitration.  Generally, the Director will select the hearing location closest to the investor's residence at the time of the events giving rise to the dispute. The investor may seek to change the hearing location by obtaining the other party's agreement or by writing to FINRA and requesting a change in location.

 

The hearing will take place in a conference room either at a regional FINRA office or in an office building or hotel arranged by FINRA in the city where the hearing will take place.

 

Customer Code Rule 12213

 

Location: Cases Involving Industry Parties 

The Director will decide which of FINRA's hearing locations will be the hearing location for the arbitration.  In cases involving an associated person, the Director will generally select the hearing location closest to where the associated person was employed at the time of the events giving rise to the dispute. In cases involving members only or more than one associated person, the Director will consider a variety of factors to determine the hearing location, such as whether the parties have a signed agreement to arbitrate.

 

The hearing will take place in a conference room either at a regional FINRA office or in an office building or hotel arranged by FINRA in the city where the hearing will take place.

 

Industry Code Rule 13213

 

Videoconferencing Available at FINRA Regional Offices

 

Record of the Hearings

FINRA digitally records all hearings, and the digital recording is the official record of the proceeding, even if the recording is transcribed. Any party may make a stenographic record of the hearing. Even if a stenographic record is made, the digital recording will be the official record of the proceedings, unless the panel determines otherwise.

 

The digital recording (or stenographic record) will be the official record of the hearing, and parties and counsel should refrain from making audio or video recordings or transmissions of the proceedings unless otherwise agreed by all parties and arbitrators.

 

Elements of a Hearing

 

Testimony and Evidence

During the arbitration hearing, a claimant seeks to prove the claims that are alleged in the Statement of Claim, and respondents try to establish any defenses to those claims and seek to prove any counterclaims.

 

Arbitrators usually accept two types of proof: oral testimony by witnesses and documentary evidence. Parties are required to inform the other party or parties of witnesses they intend to call and provide copies of any documents or other materials that they plan to use at the hearing as evidence.  Also, parties need to arrange for witnesses and all documentary evidence to be available for presentation at the hearing. Witnesses will testify under oath.

 

At the hearing, all parties will be present in the room with the arbitrators. The arbitrators open the hearing by reading from a script prepared by FINRA to cover administrative matters. Each party then has the option to give an opening statement outlining what it intends to prove during the hearing.

 

Customer Code Rules 12514, 12602, 12604, and 12605
Industry Code Rules 13514, 13602, 13604, and 13605

 

Customer Code Rule 12606
Industry Code Rule 13606

 

Direct and Cross Examination

Generally, each claimant then calls witnesses to testify on his or her behalf as to facts within the witnesses' personal knowledge.  In addition, each claimant can ask expert witnesses who have specialized training or knowledge to testify as to their opinion on a technical matter to help the arbitrators draw conclusions and render a decision. The claimant conducts a direct examination, or asks questions of any witnesses it calls to testify. 

 

Each respondent may ask questions of claimant's witnesses, too, during what is known as "cross examination," and the arbitrator(s) may also question these witnesses. The respondents may use rebuttal evidence to contradict the claimant's arguments or evidence.

 

Once the claimant(s) have presented their case, the respondent(s) also have the right to call fact and expert witnesses, and offer relevant exhibits to present their case to the arbitrators.  Each claimant may cross-examine the respondents' witnesses and the arbitrators may also question these witnesses. The claimants may use rebuttal evidence to contradict the respondent's arguments or evidence.

 

Motions

A motion is a request for the arbitrator(s) or Director to direct some act, whether by issuing an order or ruling. For example, a party must make a motion to change the hearing location or amend the Statement of Claim after the arbitration panel is appointed.

 

A party may make motions in writing or orally during a hearing session. However, FINRA requires that a party make an effort to resolve the matter with the other parties before making a motion, and to include a description of those efforts as part of the motion.  Motions, like other arbitration filings, are not required to be in any particular form.

 

Customer Code Rule 12503
Industry Code Rule 13503

 

Exhibits

Parties may offer into the record as exhibits any documents they would like the arbitrators to consider as evidence.  An exhibit is a document produced and shown to an arbitration panel during a hearing.  Parties may argue that any evidence presented by another party should not be considered in the arbitrators' decision by objecting orally at the hearing.  After considering the objecting party's reasons for excluding the evidence, the arbitrators will examine the documents presented to determine if they will be admitted into evidence and into the case record.

 

Customer Code Rule 12604
Industry Code Rule 13604

 

Closing Statements

Once all parties have presented all their evidence on any claims and counterclaims, all parties generally make a closing statement, summing up the evidence and arguing to the panel what they believe they have proven and what they contend the other side has not proven.

 

Claimants will usually repeat their request for damages and any other relief, and provide specific calculations supporting their request for a damages amount.

 

Order of a Hearing 

If arbitrators hold a hearing, it will be conducted in this order generally, although the arbitrators have authority to change the order:

  • Swearing in of arbitrators, parties and witnesses;
  • Opening statement from each party (optional);
  • Presentation of facts of the case to arbitrators, including documents and live or written testimony - claimant(s);
  • Presentation of facts of the case to arbitrators, including documents and live or written testimony - respondent(s);
  • Presentation of any counter-claims, cross-claims or third-party claims;
  • Rebuttal evidence;
  • Closing statements (claimant can choose to go last);
  • Scheduling post-hearing submissions before closing the record; and
  • Arbitration panel closes the record.

 

Customer Code Rules 12600, 12607
Industry Code Rules 13600, 13607