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Short List Option

To increase the parties' input into selecting replacement arbitrators, FINRA allows parties to agree to review a "short list" of potential arbitrators to find a replacement. FINRA will notify parties by letter of the option to stipulate to the use of a short list to select a replacement arbitrator in certain circumstances including: (1) during the arbitrator selection stage when no available ranked arbitrators remain on the primary list; (2) in paneled cases when an arbitrator needs to be replaced; and (3) when an arbitrator is unavailable due to a successful challenge for cause. Parties are free to use a short list by mutual agreement at all stages of the proceeding even if ranked arbitrators remain on the list.

If the parties stipulate to use the short list option, FINRA staff will use the list selection algorithm to randomly generate a list of three potential replacement arbitrators. FINRA staff will prescreen the arbitrators to confirm their availability for any scheduled hearing dates on the merits. FINRA then sends to all parties the list of three arbitrators along with a copy of each arbitrator's Disclosure Report. Each side may strike one name from the list and may then rank all remaining arbitrators' names in order of preference within a prescribed number of days. FINRA combines each side's list to find the highest ranked replacement arbitrator.

If the parties do not stipulate to use the short list option, FINRA staff will appoint a replacement arbitrator by randomly generating a replacement arbitrator's name using the list selection algorithm. Parties may only challenge arbitrators selected by this method for cause.

When a Postponement is Needed to Use the Short List Option

When a hearing is scheduled within five calendar days of an arbitrator's withdrawal, removal, or unavailability, the parties also will need to stipulate to a postponement to use the short list option to select a replacement arbitrator. Parties may incur postponement fees pursuant to Customer Code Rule 12601 and Industry Code Rule 13601 when hearing dates are postponed.

Frequently Asked Questions

  1. What is the short list option?
    To increase the parties’ input into selecting replacement arbitrators, FINRA allows parties to stipulate to strike and rank an additional "short list" of three arbitrators to find a replacement, rather than accept an extended list appointment.

    FINRA will first attempt to replace the arbitrator by reviewing the lists that the parties previously returned. FINRA then invites any arbitrators previously ranked by the parties to serve.
     
  2. What is the benefit of using the short list option to select a replacement arbitrator?
    Presently, when an arbitrator withdraws or is no longer available and no ranked arbitrators remain on the parties' initial ranking lists or are available, the Code of Arbitration Procedure requires that FINRA staff "extend the list" by generating randomly names of additional arbitrators using the list selection algorithm. Replacement arbitrators selected by extended list appointment may only be challenged for cause.

    Under the voluntary short list option, parties receive a list of three potential replacement arbitrators along with a copy of each arbitrator's Disclosure Report. The short list option allows parties to select a replacement arbitrator themselves rather than accept an extended list appointment arbitrator who may only be challenged for cause.
     
  3. When is a postponement required in order to use the short list option?
    When a hearing is scheduled within five calendar days of an arbitrator's unavailability, the parties will need to stipulate to a postponement to use the short list option to select a replacement arbitrator. The postponement will allow time for FINRA to generate randomly a list of three potential replacement arbitrators and for the parties to strike and rank arbitrators on the list.
     
  4. Is there a fee to use the short list option?
    No, there is no fee for using the short list option to select a replacement arbitrator. However, parties may incur postponement fees pursuant to Customer Code Rule 12601 and Industry Code Rule 13601 where hearing dates are postponed.
     
  5. Do all parties need to agree in order to use the short list option?
    Yes, all parties must agree in order to use the short list option to select a replacement arbitrator. If the parties do not agree to use the short list option, FINRA staff will select a replacement arbitrator by generating randomly a replacement arbitrator's name using the list selection algorithm. Parties may only challenge arbitrators selected by this method for cause.
     
  6. How is the short list generated?
    If the parties agree to proceed under the short list replacement option, FINRA staff will use the list selection algorithm to generate randomly a list of three potential replacement arbitrators. FINRA staff will prescreen the arbitrators to confirm their availability for scheduled hearing dates.
     
  7. How do parties rank and strike arbitrators under the short list option?
    Each side may strike one name from the list and may rank all remaining arbitrators' names in order of preference within a prescribed number of days. FINRA combines each side's list to find the highest ranked replacement arbitrator.
     
  8. Is a short list always three arbitrators?
    The default short list procedure is that FINRA staff will use the list selection algorithm to randomly generate a list of three potential replacement arbitrators and each side may strike one name from the list. However, FINRA staff will also honor a joint request from the parties for a list of five potential replacement arbitrators and each side may strike two names from the list.
     
  9. What if the parties would like a list of 10 potential replacement arbitrators?
    FINRA staff will use the list selection algorithm to select the new list of 10 arbitrators. If a new list of 10 arbitrators is generated, FINRA staff will not prescreen the arbitrators to confirm their availability for scheduled hearing dates.
     
  10. How do parties find out the short list option is available?
    FINRA will notify parties in qualifying cases by letter of the option to stipulate to the use of the short list to select a replacement arbitrator. Additionally, parties are free to use a short list by mutual agreement at all stages of the proceeding even if ranked arbitrators remain on the list.