Arbitrator Selection

The number of arbitrators appointed to a case depends on the amount and type of relief requested in the Statement of Claim.

For claims of $50,000 or less, FINRA will appoint one arbitrator and the claim will be subject to the simplified arbitration procedures. (For more information on these claims, view the "Simplified Arbitrations" section.)  The remainder of the discussion focuses on claims of more than $50,000.
 
Generally, for claims of more than $50,000 up to $100,000, the parties will select and FINRA will appoint one arbitrator, unless the parties agree in writing to three arbitrators.  For claims of more than $100,000, the parties will select and FINRA will appoint three arbitrators. 

FINRA uses the Neutral List Selection System (NLSS) to generate randomly lists of arbitrators from FINRA's arbitrator rosters to appoint a panel. Generally, the arbitrator selection process begins after the answer is due, regardless of whether the respondent answers a claim. After the answer is due, FINRA will use the NLSS to generate list(s) of arbitrators, which will include their background information, called arbitrator disclosure reports. FINRA will send the lists and arbitrator disclosure reports to the parties for their review. Parties will review the information, strike any arbitrators from the lists that they do not want on their panel, and rank the remaining choices. After parties have ranked their choices, they submit their ranked lists to FINRA. FINRA combines the parties' ranked lists and appoints the highest ranked available arbitrator from each list to serve on the panel.

Customer Code Rules 12400-12403 and 12800; Industry Code Rules 13400-13402 and 13800.

Investor Cases

Cases Decided by One Arbitrator

For claims of more than $50,000 up to $100,000, the arbitrator will be a public arbitrator selected from the public chairperson roster,  FINRA will send one list with 10 chair-qualified public arbitrators to each of the parties.  Each separately represented party may strike up to four arbitrators on the list, leaving at least six arbitrator names remaining on each party's list. In the event no ranked public chairpersons remain on the combined list, or if all remaining public chairpersons are not available to serve, FINRA will randomly appoint a public chairperson by using the NLSS.

Cases Decided by Three Arbitrators

For claims of more than $100,000 or for unspecified or non-monetary claims, the parties will select and FINRA will appoint three arbitrators. FINRA Rule 12403 allows any party to select an all public panel of arbitrators.

Effective for all arbitrator lists FINRA sends to parties on or after January 3, 2017, FINRA will send the parties three lists – one with 10 chair-qualified public arbitrators, one with 15 public arbitrators, and one with 10 non-public arbitrators. Each separately represented party may strike up to four of the ten arbitrators on the chair-qualified public list for any reason by crossing through the names of the arbitrators (at least six names must remain on the chair-qualified public list).  Each separately represented party may strike up to six of the 15 arbitrators on the public list for any reason by crossing through the names of the arbitrators (at least nine names must remain on the public list).  By striking all of the arbitrators on the non-public list, any party can ensure that the panel will have three public arbitrators. FINRA will not appoint a non-public arbitrator to the panel who has not been selected by the parties. Rather, FINRA will appoint the next highest ranked available public arbitrator to complete the panel. If none of the remaining arbitrators on the public list is available to serve, FINRA will appoint the next highest-ranked arbitrator appearing on the chair-qualified public list to complete the panel. If none of the remaining arbitrators on the chair-qualified public list are available to serve, FINRA will randomly appoint a public arbitrator using NLSS.

Customer Code Rules 12400-12401 and 12403

Industry Cases

For arbitration claims that involve only industry parties and that do not contain a statutory discrimination claim, the arbitrators are selected by the parties as follows:

Disputes Between Brokerage Firms

Cases Decided by One Arbitrator
For claims of more than $50,000 up to $100,000, the arbitrator will be a non-public arbitrator selected from the non-public chairperson roster, FINRA will send one list with 10 chair-qualified non-public arbitrators to each of the parties. Each separately represented party may strike up to four arbitrators on the list, leaving at least six arbitrator names remaining on each party's list. In the event no ranked non-public chairpersons remain on the combined list, or if all remaining non-public chairpersons are not available to serve, FINRA will randomly appoint a non-public chairperson by using the NLSS.

Cases Decided by Three Arbitrators

For claims of more than $100,000 for unspecified or non-monetary claims, the three arbitrators will be non-public arbitrators, one of whom will be selected from the non-public chairperson roster, FINRA will send two lists to each of the parties - one with 20 non-public arbitrators and one with 10 chair-qualified non-public arbitrators. Each separately represented party may strike up to eight arbitrators from the non-public arbitrator list, leaving 12 names remaining on the non-public list, and up to four from the chair-qualified non-public arbitrator list, leaving at least six names remaining on that list. In the event no ranked non-public arbitrators remain on the combined lists, or if all remaining non-public arbitrators are not available to serve, FINRA will randomly appoint one or more arbitrators of the required classification to complete the panel using the NLSS.

Disputes Between Brokers and Between or Among Brokerage Firms and Brokers

Cases Decided by One Arbitrator
For claims of more than $50,000 up to $100,000, the arbitrator will be a public arbitrator selected from the public chairperson roster, FINRA will send one list with 10 chair-qualified public arbitrators to each of the parties. Each separately represented party may strike up to four arbitrators on the list, leaving at least six arbitrator names remaining on each party's list. In the event no ranked public chairpersons remain on the combined list, or if all remaining public chairpersons are not available to serve, FINRA will randomly appoint a public chairperson by using the NLSS.

Cases Decided by Three Arbitrators

For claims of more than $100,000 for unspecified or non-monetary claims, FINRA will send three lists - one with 10 chair-qualified public arbitrators, one with 10 public arbitrators, and one with 10 non-public arbitrators. Each separately represented party may strike up to four arbitrators on each list, leaving at least six arbitrator names remaining on each party's lists. In the event no ranked arbitrators remain on the list of the required classification, or if all remaining arbitrators of the required classification are not available to serve, FINRA will randomly appoint an arbitrator of the required classification by using the NLSS.

Industry Code Rules: 13402-13406

Other Types of Intra-Industry Claims

For arbitration claims that involve only industry parties and that involve a statutory discrimination claim, promissory note proceedings, or permanent injunctive relief, please refer to the appropriate rule for the arbitrator selection rules:

Challenges for Cause

The following list, though not exhaustive, shows examples of circumstances where a challenge for cause would likely be granted. Generally, absent good cause, a party's ability to challenge an arbitrator(s) may be deemed waived if the challenge is not timely filed after a new disclosure is discovered by a party.

Opinion and Bias

  • Arbitrator has a firm opinion or belief as to the subject of a case for which he or she is an arbitrator.
  • Arbitrator has a personal bias toward a party or party representative.

Personal Relationships

  • Arbitrator is or was related by blood or marriage to a party, its attorneys or witnesses.
  • Arbitrator is or was a party's guardian.

Business Relationships

  • Arbitrator is or was a business partner, vendor, customer or client of a party.
  • Arbitrator is a surety or guarantor of the obligations of a party.
  • Arbitrator is currently a creditor or shareholder of any corporate party, or has any business relationship with a party.
  • Arbitrator is or was a conservator or conservatee, employer or employee, principal or agent, or debtor or creditor of either a party or an officer of a corporation which is a party.
  • Arbitrator is the parent, spouse or child of a person who is or was a conservator or conservatee, employer or employee, principal or agent, or debtor or creditor of either a party or an officer of a corporation which is a party.

Current Involvement

  • Arbitrator is adverse to a party, its attorneys or witnesses.
  • Arbitrator is a party to or the subject of a complaint, arbitration or litigation involving a securities investment.
  • Arbitrator is currently an expert witness for a party.

Previous Involvement

  • A party, its attorneys or witnesses previously accused an arbitrator of wrongdoing in a prior action.
  • A party, its attorneys, or witnesses filed a motion to vacate challenging an award in a case in which the arbitrator had participated and signed the award.
  • Arbitrator issued a complaint against a party, its attorneys or witnesses, in an action instituted or resolved during the past five (5) years.
  • Arbitrator or any member, shareholder or associate of, or of counsel to his or her law firm, has had an attorney/client relationship with a party within three (3) years of the filing of the arbitration claim.
  • Arbitrator or any member, shareholder or associate of, or of counsel to his or her law firm, has had an attorney/client relationship adverse to a party within three (3) years of the filing of the arbitration claim.

Financial Interest

  • Arbitrator knows that he or she has, individually or as a fiduciary, a financial interest in the subject matter in controversy or in a party in the arbitration proceeding, or any other interest that could be substantially affected by the outcome of the arbitration proceeding.
  • Arbitrator's immediate family member (as defined in Rule 12100) has a financial interest in the subject matter in controversy or in a party in the arbitration proceeding, or any other interest that could be substantially affected by the outcome of the arbitration proceeding.

Expert Witnesses

  • An arbitrator in this matter testified as an expert witness against a party during the past (5) years.
  • An arbitrator in this matter testified as an expert witness for a party during the past (5) years.
  • An arbitrator in this matter was retained as an expert witness (but did not testify) in an action involving a party during the past three (3) years.
  • An arbitrator in this matter was retained as an expert witness by a party's counsel, or his or her law firm, in an action during the past three (3) years (where no party in this matter was involved in the earlier action).