Optional All Public Panel Rules
Investors in FINRA arbitration have the option to choose an all public arbitration panel in all cases with three arbitrators. FINRA Rule 12403 allows allow investors with claims of more than $100,000 to choose between two panel composition methods when selecting the arbitrators who will serve on their cases. The rule provides that only investors, whether as claimants or respondents in a case, may choose the panel-selection method; neither brokerage firms nor brokers may choose. The rule applies only to disputes involving investors; it does not apply to disputes involving only industry parties.
The first method is called the composition rules for majority-public panel. It provides for a panel comprised of a chair-qualified public arbitrator, a public arbitrator and a non-public arbitrator. The second method, called the composition rules for optional all public panel, allows any party to select an all public arbitration panel.
Under the rule, for claims of more than $100,000, FINRA will send parties three lists of 10 arbitrators randomly generated by the computerized Neutral List Selection System (NLSS)- 10 chair-qualified public arbitrators, 10 public arbitrators and 10 non-public arbitrators. Under the majority-public panel method, each party may strike up to four arbitrators on each list; under the optional all public panel method, each party may strike up to four arbitrators on the chair-qualified public arbitrator list and on the public arbitrator list.
However, under the optional all public panel method, each party may strike up to all of the arbitrators on the non-public arbitrator list. After striking arbitrators from the lists, the parties will rank the remaining arbitrators in order of preference and FINRA will appoint the panel from among the names remaining on the lists that the parties return. By striking all the arbitrators on the non-public list, any party may ensure that the panel will have three public arbitrators.
Customer Code Rule 12403
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