Arbitrator Disclosure

Arbitrator disclosure is the cornerstone of FINRA arbitration, and the arbitrator's duty to disclose is continuous and imperative. Disclosure includes any relationship, experience and background information that may affect—or even appear to affect—the arbitrator's ability to be impartial and the parties' belief that the arbitrator will be able to render a fair decision. This includes any brokerage firm where the arbitrator/spouse/family member has or had an account or employment. This also includes, but is not limited to, lawsuits (even non-investment related lawsuits); any publications (even if they appear only online); professional memberships; service on boards of directors; etc. When making disclosures, arbitrators should consider all aspects of their professional and personal lives and disclose all ties between the arbitrator, the parties, and the matter in dispute, no matter how remote they may seem. If you need to think about whether a disclosure is appropriate, then it is: Make the Disclosure. Failure to disclose may result in vacated awards which undermine the efficiency and finality of our process. Failure to disclose may also result in removal from the roster.

 

Neutrality starts with complete and accurate disclosures in FINRA's arbitrator application. FINRA uses the application as the foundation for the Arbitrator Disclosure Report (Disclosure Report)—a summary of an arbitrator's background—which is provided to parties to help them make informed decisions during the arbitrator selection process. Please review the sample Arbitrator Disclosure Report on our website.

 

Required Disclosures

 

Case-Specific Disclosures

Rule 12405 of the Code requires arbitrators to make a reasonable effort to learn of, and disclose to FINRA, any circumstances that might preclude them from rendering an objective and impartial determination in the proceeding, including:
 

  • Any direct or indirect financial or personal interest in the outcome of the case.
  • Any existing or past financial, business, professional, family, social, or other relationships or circumstances with any party, representative, or potential witness, that is likely to affect impartiality or might reasonably create an appearance of partiality or bias.
  • Any such relationship or circumstances involving members of the arbitrator's family or the arbitrator's current employers, partners or business associates; and
  • Any existing or past service as a mediator for any of the parties in the case for which the arbitrator has been selected.

 

Individuals employed in the securities industry should also disclose whether their firm makes a market in the securities involved in the assigned case, and whether they have placed clients in the same or similar investment. All arbitrators should consider whether they hold (or have held) a position in the security/investment involved, and disclose this information to FINRA.

 

Arbitrators must also make any disclosures regarding the nature of the subject matter submitted to arbitration, including any opinion, belief or position that they may have regarding any substantive issue in dispute.

 

Non Case Specific Disclosures

In addition to potential case-specific conflicts, arbitrators must also disclose any circumstance that would require their temporary or permanent removal from the roster, in accordance with the Arbitrator Disqualification Criteria, or affect their classification as either a public or non-public arbitrator.

 

The obligation to disclose interests, relationships or circumstances that might preclude an arbitrator from rendering an objective and impartial determination is a continuing duty that requires an arbitrator who accepts an appointment to disclose—at any stage of the proceeding—any such interests, relationships or circumstances that arise, or are recalled or discovered. In addition to relationships, it is advisable to disclose any life experience that may raise any doubt about your ability to be impartial.

 

These disclosure requirements also apply to arbitrators who hear cases between industry parties only. (Go to Rule 13408 of the Code of Arbitration Procedure for Industry Disputes.)

 

 

Resources

 

FINRA offers several resources to help you comply with your continuing obligation to disclose. FINRA continually updates this information to ensure that arbitrators are apprised of the latest disclosure requirements.

 

 

Contact FINRA if you have any questions about disclosure.