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 disclosure about clients, accounts or conflicts, including the nature of the conflict. For example, any brokerage firm where the arbitrator/spouse/family member has or had an account or employment should be disclosed. Arbitrators are under a continuing obligation to update this information and must disclose:
- new relationships as they arise,
- any circumstance or event that might affect their ability to serve impartially or might create an appearance of bias. This 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.
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. Full disclosure also requires arbitrators to include events and circumstances that occurred while using a former name.
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.
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 might affect their ability to serve under 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.)
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.
- Code of Arbitration Procedure
- Code of Ethics for Arbitrators in Commercial Disputes. In addition to ethical guidance, the annotations provide information about how the courts have interpreted the Code of Ethics for Arbitrators in Commercial Disputes
- Oath of Arbitrator and Arbitrator Disclosure Checklist. The Oath and Checklist must be completed when you are initially appointed to a case, prior to attending any hearing session and making any decisions as an arbitrator. The questions on the Checklist are intended to help you comply with your disclosure requirements as stated in FINRA Rule 12405.
- Arbitrator Disqualification Criteria. FINRA outlines temporary and permanent criteria that would affect your ability to serve on the roster.
- Online Training: Your Duty to Disclose. FINRA encourages arbitrators to complete this free online training that reinforces the need for arbitrators to meet their continuing disclosure obligations and its importance to the neutrality of the process.
- Arbitrator's Guide. The Arbitrator's Guide provides arbitrators with important information and resources to complete their assignments.
- Neutral Workshops. These workshops discuss new developments within FINRA's dispute resolution program for practicing arbitrators and mediators, and allows them to hear directly from DR senior leaders.
- The Neutral Corner. FINRA's electronic newsletter provides updates to arbitrators and mediators on new rules and procedures within securities dispute resolution.
- Sample Arbitrator Disclosure Report. This sample provides an example of a complete Disclosure Report with annotations explaining certain sections.
- FINRA DR Portal. If you have already registered with the portal, please go to the DR Portal Web page and log in to make updates to your profile. If you have not registered and would like to receive a registration invitation, please send an email to Dispute Resolution Neutral Management to request an invitation. Please include "request portal invitation" in the subject line. Note: you must use your unique invitation to register with the portal.
Contact FINRA if you have any questions about disclosure.