Changes to FINRA's Hearing Scripts Effective April 28, 2008

Things may sound a little different at the end of your next FINRA arbitration hearing. We have made two changes to the hearing scripts that will become effective, and available on our Web site, on April 28, 2008.

Damage Requests
The first change follows our efforts to provide our constituents with more information about investors' recovery rates in our forum. During the hearing, parties will sometimes amend their damage requests. To clarify the difference between the damages sought and awarded, we amended the hearing scripts.

The scripts will now contain the following language:

 

We realize that at the time the claim was initiated the parties may not have had all of the information needed to accurately or completely calculate their claims. Therefore, at this point, we ask that the parties restate their respective claims. For parties requesting damages, please provide us with a summary of your final request for damages. You may present your final damage request as a range, as opposed to a specific monetary amount.

 

Note to Arbitrators: If a party's final request for damages is different from the amount stated in its pleading, please record this amount on the Award Information Sheet, item number 10.

 

As noted in the script excerpt above, if a party's final damage request differs from the party's request in an earlier pleading, then arbitrators will record the final amount on the Award Information Sheet, which can be found on page 101 of the Arbitrator's Reference Guide. The parties' original requests, as specified in their pleadings, and these new final damage requests will appear in all awards.

Reminder Regarding Amendments
As a matter of right, parties may amend their pleadings until the panel is appointed. Once a panel is appointed, parties may only amend their pleadings if the panel grants a motion to amend the pleading. We encourage you to review the Codes of Arbitration Procedure for Customer and Industry Disputes (Codes), Rules 12309 and 13309 respectively, for more information on amending pleadings.

Closing the Hearing
The second change followed the consolidation of NASD's and NYSE's dispute resolution functions. A working group of the National Arbitration & Mediation Committee examined each forum's best practices, which included the use of different hearing scripts.

To make certain that each party has the opportunity to present its complete case, the script will guide arbitrators, before closing the hearing, to ask the following question:

 

Do the parties have any other issues or objections that you would like to raise that you have not previously raised?

 

The revised language reminds arbitrators to ensure that the record is complete before they close the hearing.

These changes will be effective on April 28, 2008.

The current three-member panel hearing script, single arbitrator hearing script and Award Information Sheet are contained in the Arbitrator's Reference Guide. In addition, FINRA staff will distribute the revised scripts to arbitrators as part of their case packets.