finra

FINRA

For Release:
Contacts:

Wednesday, September 26, 2007
Nancy Condon (202) 728-8379

Sarah Bohn (202) 728-8988

 

 

FINRA Board Approves Rule to Limit Motions to Dismiss in Arbitrations

Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that its Board of Governors approved rule amendments designed to limit significantly the number of dispositive motions - more commonly known as motions to dismiss -- filed in its arbitration forum and to impose strict sanctions against parties who engage in abusive motions practices.

"In many instances dispositive motions were being used to needlessly delay arbitration hearings, which resulted in investors not getting cases heard on a timely basis and incurring extra costs," said Linda Fienberg, President of FINRA Dispute Resolution. "We believe the proposed revisions will curb any abuses and ensure that investors maintain the right to have their arbitration claims heard."

Under FINRA's proposal, if a party (typically a respondent firm) files a dispositive motion before a claimant finishes presenting its case, the arbitration panel would be limited to three grounds on which to grant the motion: if the parties settled their dispute in writing; "factual impossibility," meaning the party could not have been associated with the conduct at issue; or the existing 6-year time limit on the submission of arbitration claims. The rule proposal also would require that arbitrators hold a hearing on such motions and that any decision to grant a motion to dismiss be unanimous, and be accompanied by a written explanation.

The proposed amendments also would require the panel to assess against the filing party all forum fees associated with hearings on dispositive motions if the panel denies the motion, and would require the panel to award costs and attorneys' fees to the party that opposed a dispositive motion deemed frivolous by the panel. Under the rule proposal, when a respondent files a dispositive motion after the conclusion of the claimant's case, the provisions above would not apply. However, the rule would not preclude the arbitrators from issuing an explanation or awarding costs or fees.

The rule amendments now go to the Securities and Exchange Commission for review and approval.

FINRA Dispute Resolution is the largest securities dispute resolution forum in the world. FINRA facilitates the efficient resolution of monetary, business and employment disputes between investors, securities firms and employees of securities firms by offering both arbitration and mediation services through a network of hearing locations across the United States. FINRA has a total of 73 hearing locations in all 50 states, Puerto Rico and London. For a complete list, see the FINRA Dispute Resolution map of regional offices and mediation hearing locations. To initiate a mediation or arbitration online or to find out more about FINRA Dispute Resolution forum, visit FINRA's Web site www.finra.org.  

FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business-from registering and educating all industry participants to examining securities firms; writing and enforcing rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.finra.org.