Regulatory Notice 13-30

SEC Approves Amendments to Customer Arbitration Code to Simplify Panel Selection in Cases With Three Arbitrators

The SEC approved amendments to FINRA Rule 12403 of the Code of Arbitration Procedure for Customer Disputes (Customer Code) to simplify the arbitration panel selection process in cases with three arbitrators. Under the amended rule, parties in all customer cases use the same panel composition method. Under this method, FINRA will provide the parties with lists of 10 chair-qualified public arbitrators, 10 public arbitrators and 10 non-public arbitrators. The parties may strike four arbitrators on the chair-qualified public list and four arbitrators on the public list. Any party may select an allpublic arbitration panel by striking all of the arbitrators on the non-public list. If a party wants a non-public arbitrator on the panel, the party can limit its strikes on the non-public list. Limiting strikes does not guarantee that FINRA will appoint a non-public arbitrator to the panel in every instance as explained below.

The amendments are effective on September 30, 2013, for all customer cases filed on or after the effective date. The amendments are also effective for pending cases in which the 35-day time period for electing a panel composition method has not expired as follows: If a customer does not elect a panel composition method within the 35-day time period, panel composition will proceed under the amended rule, not under the default provision in the current rule.