Office of Hearing Officers’ Mediation Program

What is Mediation

Mediation is a non-binding alternative dispute resolution (ADR) process in which a neutral mediator helps the parties reach an agreed resolution of the disputed issues in the disciplinary proceeding. The mediator assists the parties in reaching their own negotiated settlement by defining the issues, probing and assessing the strengths and weaknesses of each party’s positions, and identifying areas of agreement and disagreement. The mediation process is voluntary and confidential. The mediator does not decide the issues or impose a solution on the parties.

In mediation, parties and counsel meet with the mediator, sometimes collectively and sometimes individually. The parties express their respective positions and interests and generate options for a mutually agreeable resolution to the dispute.

The parties in FINRA’s disciplinary process often find mediation beneficial. Mediation can result in a quick and less costly resolution of the proceeding, and can produce solutions sometimes unavailable after a hearing.

Mediation Procedures

1. Confidentiality

  1. To facilitate open communication among the parties and a settlement of the dispute, the mediation process is confidential. All communications made during the mediation, whether oral or written, are confidential, privileged settlement discussions, and are inadmissible for any purpose in the proceeding.
  2. If a party informs the mediator that information is being conveyed in confidence, the mediator will not disclose it to other parties.
  3. The mediator shall not disclose any information outside the mediation, other than to report the status of the mediation to the Office of Hearing Officers’ Mediation Administrator and the Chief Hearing Officer.
  4. The mediator may not be called as a witness in any FINRA proceeding related to a case in which the mediator served, or be requested to produce documents that the mediator received or prepared in the course of the mediation.

2. Disqualification of the Mediator

  1. Before accepting appointment as a mediator, and at all times thereafter, a mediator shall disclose to the Chief Hearing Officer any circumstance where the mediator’s fairness might reasonably be questioned.
  2. If circumstances arise after the mediator is appointed where the mediator’s fairness might reasonably be questioned, the mediator shall promptly notify the Chief Hearing Officer and withdraw as mediator. Moreover, any party may request that the Chief Hearing Officer remove the mediator and appoint a replacement. Such a request should be made promptly upon the discovery of the potentially disqualifying circumstances.

3. Mediation Scheduling

  1. The mediator or the Office of Hearing Officer’s Mediation Administrator shall confer with counsel for the parties, or the parties themselves if unrepresented, immediately after assignment of a case to determine an appropriate date, time, and location for the first mediation session.
  2. The mediation will conclude when the parties reach a resolution of some or all issues in the case or when the mediator or parties conclude that resolution (or further resolution) is not possible.

4. Written Submissions

  1. The mediator may direct the parties to submit a a pre-mediation memorandum that sets forth in concise form:
    1. the party’s contentions as to both liability and sanctions;
    2. the status of any previous settlement negotiations;
    3. the party’s reasonable settlement range; and
    4. any other information that the mediator determines may assist the parties in reaching an agreed settlement of the case.
  2. All pre-mediation memoranda shall be subject to the confidentiality of the mediation process.

5. Attendance at Mediation Sessions

  1. A mediation typically consists of a joint session involving all parties and their counsel, as well as private sessions between the mediator and each party. The participation of parties is strongly favored as it enables parties to articulate their positions and interests, to hear firsthand the positions and interests of the other parties, and to participate in discussions with the mediator both in joint and private sessions. However, there are circumstances where the participation of counsel alone is sufficient. The parties and their attorneys shall attend mediation sessions as directed by the mediator.
  2. A respondent that is a corporation or other legal entity must be represented by a decision maker who has full settlement authority and who is knowledgeable about the facts of the case.
  3. FINRA shall be represented by an individual who has, to the greatest extent feasible, full settlement authority, is knowledgeable about the facts of the case, and is fully advised of FINRA’s positions and policies regarding settlement of the case. Also, FINRA’s attorney shall arrange to have a representative from FINRA’s Office of Disciplinary Affairs (ODA) available throughout the day during in-person mediations. The ODA representative shall have authority to orally approve the terms of any settlement the parties reach.

6. Mediation Location

  1. Mediation sessions usually occur by telephone conference call.
  2. If the mediator and the parties decide that an in-person mediation would be beneficial, the mediation sessions will take place at an agreed location.

7. Reporting

  1. After the mediation is completed, the mediator will officially close the mediation and prepare a report of the mediator indicating that the mediation was:
    1. Held and a settlement was reached.
    2. Held and a partial settlement was reached.
    3. Held but was unsuccessful.
    4. Not held because a settlement was reached without mediation.
    5. Not held as one or both parties withdrew from the mediation.
    6. Not held because one or both parties would not negotiate from their initial position.
  2. The mediator shall submit the report to Office of Hearing Officer’s Mediation Administrator by email. The report shall not be included in the record of the proceeding.
  3. If a settlement is reached, the parties shall promptly file a motion to stay the proceeding based upon the respondent’s signed offer and ODA’s oral approval, and submit a proposed order approving the settlement to ODA for its formal written approval of the settlement as final FINRA action as to each settling respondent.

Frequently Asked Questions

How are mediators appointed?
The Office of Hearing Officers’ Chief Hearing Officer appoints a Hearing Officer (other than the Hearing Officer assigned to the case) who is free of any conflict of interest to conduct the mediation.
Is there a transcript; can I record mediation sessions?
No. Mediations are confidential; no record is made of the mediation sessions.
Where do mediations take place?
Typically, mediators conduct mediations by telephone, but in some circumstances, the mediator and the parties may determine that an in-person mediation is warranted.
If a settlement is not reached, will the presiding Hearing Officer and Hearing Panelists be informed of the parties’ positions in the mediation?
No. The Hearing Panelists (including the presiding Hearing Officer) will not be advised of any of the parties’ communications made in connection with the mediation.
If no settlement is reached, am I still entitled to a hearing?
Yes. If no settlement is reached, the case will proceed to hearing as scheduled. Also, the mediation process does not stay the case.