FINRA Requests Comment on Modernizing FINRA Arbitration Rules, Guidance and Processes

Summary

Arbitration is an important means for resolving disputes involving customers, FINRA member firms and their associated persons. FINRA’s Dispute Resolution Services (DRS) arbitration forum provides a fair and efficient alternative to litigation, promoting investor protection and market integrity.

As a self-regulatory organization (SRO), FINRA is committed to continuous improvement that draws on deep engagement with its members, the investing public and other interested parties. As part of this commitment, FINRA is reviewing its rules, guidance and processes to modernize requirements, facilitate innovation and eliminate unnecessary burdens.¹ To help inform the direction of its review, FINRA issued a general request for comment followed by two additional requests focused on capital formation and the modern workplace.² In response to these requests, several commenters raised concerns relating to FINRA’s arbitration forum. As a result of the comments, as well as engagement outside of the comment process, FINRA has identified arbitration as an area of focus for its review.

Over the years, FINRA has frequently made changes to its rules, guidance and processes to help ensure that customers, members and their associated persons are treated fairly in an efficient and transparent arbitration forum. In addition, it has regularly sought input on challenging securities arbitration issues, including through issuing several discussion papers, and made changes in response to that input. FINRA has also enhanced its arbitration forum in response to recommendations from task forces representing a wide range of perspectives, which proposed approaches to enhance the transparency, impartiality and efficiency of FINRA’s arbitration forum for all participants.

This Notice requests comment on key areas of concern raised by commenters and others relating to FINRA’s arbitration forum. The responses to this Notice will help FINRA consider how to further revise its arbitration rules, guidance and processes.

Questions concerning this Notice should be directed to: 

• Victoria Crane, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8104 or by email; or
• Carissa Laughlin, Assistant General Counsel, OGC, at (212) 858-4115 or by email. 

Action Requested

FINRA encourages all interested parties to comment. Comments must be received by May 1, 2026.

Comments must be submitted through one of the following methods: 

• online using FINRA’s comment form for this Notice;
• emailing comments; or
• mailing comments in hard copy to:
  
  Jennifer Piorko Mitchell
  Office of the Corporate Secretary
  FINRA
  1700 K Street, NW
  Washington, DC 20006

To help FINRA process comments more efficiently, persons should use only one method to comment.

Important Note: All comments received in response to this Notice will be made available to the public on the FINRA website. In general, FINRA will post comments as they are received.³

I. Background 

As part of the FINRA Forward rule modernization initiative, FINRA initially published three requests for comment (the rule modernization Notices).⁴ Of the 127 comments received in response to the rule modernization Notices, 13 included arbitration-related concerns or recommendations.⁵

Most of these arbitration-related concerns and recommendations commenters raised relate to the arbitration of disputes between customers and members or associated persons (i.e., customer disputes) governed by the Code of Arbitration Procedure for Customer Disputes (Customer Code).⁶ However, some apply to the arbitration of disputes between members, members and associated persons, or associated persons (i.e., intra-industry disputes) governed by the Code of Arbitration Procedure for Industry Disputes (Industry Code).⁷ Other concerns and recommendations are more procedural and apply to both customer and intra-industry disputes. 

FINRA is committed to making changes to its rules, guidance and processes, and addressing challenging issues facing its arbitration forum. For example, FINRA recently amended its rules to make a number of significant enhancements to the process relating to the expungement of customer dispute information, addressing concerns with the expungement process at the time and providing additional safeguards to help ensure that registration information about associated persons is accurate and complete.⁸ In addition, as discussed in more detail below, FINRA has focused on ways to strengthen its rules to reinforce payment of arbitration awards in its forum.⁹

FINRA has also already addressed some of the recommendations commenters raised in response to the rule modernization Notices. For example, in May 2025, FINRA changed the employment and educational qualifications for new arbitrators, such that applicants must have a four-year college degree and at least five years of full-time paid professional work experience, either inside or outside of the securities industry.¹⁰ In July 2025, FINRA enhanced its current voluntary “Short List Option” program to provide parties with additional short list options when replacing arbitrators.¹¹ In addition, FINRA recently amended its rules to expressly provide that, at any stage of an arbitration proceeding, the Director¹² may remove an arbitrator if all the named parties agree in writing to the arbitrator’s removal.¹³ Discussions regarding potential updates to FINRA’s discovery rules and procedures with FINRA’s National Arbitration and Mediation Committee (NAMC)¹⁴—informed by a subcommittee of NAMC members focused solely on discovery-related issues (Discovery Subcommittee) that has been meeting regularly since June 2024—are well underway.¹⁵ FINRA is also reviewing whether to increase the honoraria payments that arbitrators receive for services they provide to FINRA’s arbitration forum.¹⁶ However, further work in these areas may benefit from additional comment.

In addition, some of the concerns raised in response to the rule modernization Notices involve controversial issues that have been discussed in connection with FINRA’s arbitration forum for years, including by the previously formed task forces,¹⁷ and would benefit from additional input regarding modern practices and how FINRA’s arbitration forum works today for participants. While the rule modernization Notices elicited valuable feedback on arbitration-related concerns, those Notices covered a variety of topics and did not request specific comment on arbitration. To ensure FINRA is hearing from the full range of interested parties, this Notice requests comment generally on FINRA’s arbitration process; key areas of concern commenters already raised; and other more specific rules, guidance and processes relating to FINRA’s arbitration forum. FINRA is grateful for the comments submitted in connection with the rule modernization Notices and will consider responses to any earlier requests for comment. Interested parties may wish to supplement their comments but need not resubmit materials they have previously shared.

To aid interested parties in their consideration of the issues presented, this Notice first provides background on securities arbitration and FINRA’s arbitration forum, including when parties to a customer dispute are required to arbitrate in FINRA’s arbitration forum. The Notice then outlines the issues and seeks comment on how FINRA can further evolve its arbitration rules, guidance and processes. While the Notice highlights certain rules, guidance and processes for comment, comments need not be limited to the topics and questions FINRA identifies below. 

As part of these efforts, FINRA will continue to engage in its normal rulemaking process to propose any specific rule amendments, which includes discussions with the FINRA Board, input from FINRA’s advisory committees, including the NAMC, and an opportunity for comment on specific proposed revisions in a Notice or rule filing with the Securities and Exchange Commission (SEC or Commission) or both. Before becoming effective, a proposed rule change must be authorized by the FINRA Board and approved by the SEC.¹⁸

Arbitration in the broker-dealer industry has been conducted for many years,¹⁹ and subject to oversight by the SEC since 1934. As early as 1935, the SEC commented on the arbitration forum the NYSE operated.²⁰ In 1976, the SEC established an Office of Consumer Affairs, whose mandate was to explore alternative methods for the resolution of disputes between individual customers and brokers and firms, including establishing a single nationwide system for customer dispute resolution.²¹ Ultimately, the SEC concluded that litigation is a burdensome and complex option, as well as cost prohibitive, for customers with small claims.²²

In light of the fact that several SROs maintained separate arbitration fora at the time, the SEC decided not to impose rules related to customer dispute resolution as long as the SROs took affirmative measures to provide nationwide fora with uniform rules, accessibility for customers, convenient locations, fair fees and panels that included persons not engaged in the securities business.²³ For the past 50 years, the SEC has overseen the evolution of arbitration to resolve customer disputes against broker-dealers, including through the SRO rule filing process.

In 1968, approximately 150 years after NYSE included a general arbitration provision in its constitution, FINRA’s predecessor, NASD, adopted its first arbitration code²⁴ and subsequently began administering an arbitration forum in January 1969.²⁵ NASD and NYSE administered separate arbitration fora until 2007 when FINRA was created through the consolidation of NASD and the member regulation, enforcement and arbitration operations of NYSE.²⁶ By this time, NASD was administering over 94 percent of customer disputes with broker-dealers²⁷ and had already assumed, by agreement, the arbitration functions of several SROs that closed their dispute resolution fora.²⁸ Today, FINRA continues to provide other SROs with dispute resolution services pursuant to Regulatory Services Agreements.²⁹

Building on this long history, FINRA today operates the largest securities arbitration forum in the United States to assist in the resolution of monetary and business disputes involving customers, members and associated persons.³⁰ FINRA’s role in the arbitration process is to administer cases brought to the forum in a neutral, efficient and fair manner, in accordance with its rules. In its capacity as a neutral administrator of the forum, FINRA does not have any input into the outcome of arbitrations. FINRA’s arbitration forum is intended to provide impartial dispute resolution that is less costly and faster than traditional litigation. FINRA’s arbitration forum charges low arbitration fees, provides a Discovery Guide for customer disputes, limits dispositive motions made prior to the party resting its case, and provides sanctions for frivolous motions and abusive motion practices.³¹

All rules related to FINRA’s arbitration forum have been filed with and approved by the SEC, after a comment process and a finding by the SEC that such rules are in the public interest.³² The SEC regularly examines FINRA’s arbitration forum. 

Arbitration awards in FINRA’s arbitration forum are considered final and not currently subject to review or appeal through the FINRA forum. Nor are they appealable to FINRA itself. However, under the Federal Arbitration Act of 1925 (FAA)³³ parties have the right to challenge arbitration awards—whether rendered by an arbitration panel in FINRA’s forum or a private arbitration forum—by filing a motion to vacate, modify or correct the award in a court of competent jurisdiction.³⁴

From January 1, 2021, through December 31, 2025, parties filed 14,023 new cases in FINRA’s arbitration forum. Of these, 8,707 involved customer disputes and 5,316 involved intra-industry disputes. From January 1, 2021, through December 31, 2025, 16,343 cases closed in FINRA’s arbitration forum. Of these, 10,393 involved customer disputes and 5,950 involved intra-industry disputes.

To provide transparency, FINRA publishes detailed arbitration statistics on its website, including the number of cases filed and their respective outcomes.³⁵ Of the 10,393 arbitration cases involving customer disputes that closed, 13 percent (or 1,391 cases) closed by award and 71 percent (or 7,385 cases) settled prior to award.³⁶ Of the 1,391 arbitration cases involving customer disputes that closed by award, customers were awarded damages in 29 percent (or 409) of cases. Of the 1,391 arbitration cases involving customer disputes that closed by award, 734 arbitration cases closed by award after a hearing on the merits (i.e., excluding cases dismissed prior to the hearing on the merits). Of those 734 arbitration cases, customers were awarded damages in 43 percent (or 313) of cases. Of the 5,950 arbitration cases that closed involving intra-industry disputes, 24 percent (or 1,429 cases) closed by award and 59 percent (or 3,499 cases) settled prior to award.³⁷ FINRA makes all awards publicly available on its website.³⁸

FINRA’s arbitration forum has 69 hearing locations—at least one in every state. Depending on the amount of damages being sought, disputes in FINRA’s arbitration forum are heard by either a panel of three arbitrators or by a single arbitrator.³⁹ FINRA currently maintains a roster of approximately 8,000 arbitrators, conducts a comprehensive pre-approval background check on all arbitrator applicants, and provides arbitration training and continuing education for arbitrators. Members pay for most costs, and FINRA waives fees for customers and associated persons experiencing financial hardship. 

Broker-dealers and investment advisers often require customers to enter into agreements to arbitrate disputes arising from the services provided to such customers, as a condition to opening an account. FINRA rules do not require such agreements, nor do they preclude customers from pursuing relief in state or federal courts.⁴⁰ However, FINRA rules establish certain minimum disclosure and related requirements regarding the use of such agreements.⁴¹

Under FINRA rules, arbitration in FINRA’s forum is required if there is a written agreement to arbitrate at FINRA or if requested by the customer, consistent with the long historical practice of the securities industry.⁴² Even with a predispute arbitration agreement, members and customers may elect, by mutual consent after a dispute has arisen, to resolve their disputes in a forum other than at FINRA, such as at a private arbitration forum (e.g., the American Arbitration Association (AAA), JAMS) or by civil litigation. In addition, if a written agreement to arbitrate at FINRA does not exist and if the customer does not request FINRA arbitration, the parties to a dispute may agree to resolve their disputes at a private arbitration forum or in civil litigation. FINRA rules also protect a customer’s right to pursue class actions in court notwithstanding any predispute arbitration agreement.⁴³

Overlaying FINRA’s arbitration forum and rules is the FAA.⁴⁴ This law establishes a liberal federal policy favoring arbitration agreements. A rich and variegated case law has developed under the FAA, including a number of Supreme Court cases. The FAA implicates several significant issues relating to FINRA’s arbitration rules and processes. Thus, in commenting on the issues below, FINRA requests that commenters be mindful of how any suggested changes may implicate the FAA and the related judicial precedent.

II. Discussion

This section outlines issues raised relating to FINRA’s arbitration forum and seeks comment on how FINRA can further evolve its arbitration rules, guidance and processes.

Rule 12200 requires parties to arbitrate certain disputes under the Customer Code if arbitration is either required by a written agreement or requested by the customer; the dispute is between a customer and a member or associated person of a member; and the dispute arises in connection with the business activities of the member or the associated person.⁴⁵ This rule preserves a customer’s ability to resolve disputes through FINRA arbitration, regardless of whether arbitration is required by a written agreement.⁴⁶ 

The question of whether forum selection clauses in members’ customer agreements requiring resolution of disputes in court or an alternative arbitration forum violates FINRA rules has been a topic of discussion for years. For example, the 2014 Task Force stated in its report that it “was in agreement that interpreting a forum selection clause as a waiver of a retail customer’s right to arbitrate pursuant to FINRA rules is against public policy.”⁴⁷ In 2016, FINRA published Regulatory Notice 16-25 to remind members that customers have a right to request arbitration at FINRA’s arbitration forum at any time and do not forfeit that right under FINRA rules by signing any agreement with a forum selection clause specifying another dispute resolution venue other than FINRA’s arbitration forum.⁴⁸

At the time FINRA published Regulatory Notice 16-25, federal appellate court decisions in the Second and Ninth Circuits had held in cases involving institutional customers that forum selection clauses in agreements between FINRA members and the customers that required resolution of issues in court superseded the requirements of Rule 12200.⁴⁹ In addition, the Fourth Circuit had held in a case involving institutional customers that a forum selection clause that required resolution of disputes in court did not have the effect of superseding or waiving the customer’s right to arbitration.⁵⁰ However, the Fourth Circuit also determined that the obligation to arbitrate under Rule 12200 can be superseded and displaced by a more specific agreement between the parties.⁵¹ 

Since the publication of Regulatory Notice 16-25, the Third Circuit also has considered whether forum selection clauses in agreements between a FINRA member and an institutional customer that required resolution of disputes in court superseded the requirements of Rule 12200.⁵² The Third Circuit agreed with the Fourth Circuit that the forum selection clauses were insufficient to waive the customer’s right to arbitration under Rule 12200.⁵³ The Third Circuit noted that had the broker-dealer wanted the customer to waive its right to arbitrate, the broker-dealer should have referenced arbitration in the agreements.⁵⁴ The Third Circuit also stated it was “reluctant to find an implied waiver” because the customer’s “right to arbitrate is not contractual in nature, but rather arises out of a binding, regulatory rule that has been adopted by FINRA and approved by the SEC.”⁵⁵ The Third Circuit declined to address whether an explicit waiver would violate Section 29(a) of the Exchange Act, which provides that “[a]ny condition, stipulation, or provision binding any person to waive compliance with . . . any rule of a self-regulatory organization . . . shall be void.”

In response to the rule modernization Notices, FINRA received feedback saying that Rule 12200 should be amended to allow members to contractually agree to opt out of FINRA arbitration and arbitrate disputes in alternative fora when the claim is seeking damages over a certain dollar amount or involves counterparties that qualify as institutional customers under FINRA rules.⁵⁶ FINRA also received feedback rejecting this recommendation as it pertains to claims seeking damages over a certain dollar amount.⁵⁷

From January 2016 through June 2025, there were 21,521 cases filed by a customer after January 2011 that closed in FINRA’s arbitration forum. Of the 21,521 cases, approximately 1 percent (252 cases) related to claims that were greater than $10 million, and 6 percent (1,254 cases) related to claims that were between $1 million and $10 million. (Some cases did not specify a claim amount.) Of the 21,521 cases, approximately 14 percent (2,931 cases) closed by award, 72 percent (15,519 cases) settled prior to award, 9 percent (2,025 cases) were withdrawn, and 5 percent (1,046 cases) closed by other means (e.g., bankruptcy of critical party, uncured deficient claim, forum denied or stayed by court action). Of the 2,931 awards rendered, only 14 awards (or less than 1 percent of awards) exceeded $10 million in monetary damages (some including punitive damages and attorneys’ fees), and 25 awards (or less than 1 percent of awards) exceeded $5 million in monetary damages (some including punitive damages and attorneys’ fees).

Alternatively, FINRA has received feedback that FINRA rules should allow customers to choose whether to resolve disputes in FINRA’s arbitration forum or court.⁵⁸

Request for Comment 

A(i).1. Should certain categories of claims (e.g., of a certain complexity or value) or customer dispute types (e.g., those involving institutional customers or holders of institutional accounts) be subject to different requirements under FINRA rules? For example:

1. Should certain categories of claims or customer dispute types be subject to different procedural requirements under FINRA rules, such as allowing the parties to have more control over the administration of their case?⁵⁹ What customer protection and fairness considerations should be part of evaluating this question?
2. For some types of claims in FINRA’s arbitration forum, FINRA requires arbitrators to have additional qualifications to be eligible to serve on a panel considering such claims.⁶⁰ Should certain other categories of claims or customer dispute types be considered by a panel with additional qualifications or experience? If so, what types of claims or customer disputes and what should be the minimum additional qualifications or experience of the panel? What customer protection and fairness considerations should be part of evaluating this question?

A(i).2. Should FINRA no longer allow in its arbitration forum certain categories of claims (e.g., of a certain complexity or value) or customer dispute types (e.g., those involving institutional customers or holders of institutional accounts)? What customer protection and fairness considerations should be part of evaluating this question?

A(i).3. Should FINRA allow parties to contractually agree in advance to opt out of FINRA arbitration and arbitrate disputes in alternative fora for certain categories of claims (e.g., of a certain complexity or value) or customer dispute types (e.g., those involving institutional customers or holders of institutional accounts)? What customer protection and fairness considerations should be part of evaluating this question?

A(i).4. Should customers be allowed to unilaterally choose, post dispute, between arbitration and litigation even if they signed a customer agreement with an alternative forum selection clause? Alternatively, should FINRA permit arbitration in its forum only where both parties agree to such arbitration post dispute? What fairness considerations should be part of evaluating this question?

A(i).5. Do participants still experience FINRA arbitration as less expensive and faster than litigation? Are there changes that FINRA should consider making to its arbitration forum to make it more expeditious and cost effective relative to courts?

FINRA Rule 13200 (Required Arbitration) requires members and associated persons to arbitrate certain disputes under the Industry Code if the dispute arises out of the business activities of a member or an associated person and is between or among members; members and associated persons; or associated persons.⁶¹

The Form U4 (Uniform Application for Securities Industry Registration or Transfer) requires associated persons to sign the Form U4 as a condition of employment in the securities industry and requires associated persons to submit to arbitration any claim that is eligible for arbitration under the rules of the SRO with which they register.⁶² 

In response to the rule modernization Notices, FINRA has received feedback suggesting that Rule 13200 be amended to allow parties to enter agreements that waive the requirement to arbitrate in FINRA’s arbitration forum and permit arbitration in alternative fora.⁶³ FINRA also has received feedback that FINRA should not amend Rule 13200 in this manner.⁶⁴

Request for Comment 

A(ii).1. Should FINRA amend its rules to no longer require disputes arising out of the business activities of members or associated persons to be arbitrated under the Industry Code? What fairness considerations should be part of evaluating this question?

A(ii).2. Should FINRA no longer require specific types of disputes arising out of the business activities of members or associated persons to be arbitrated under the Industry Code? If so, what types of disputes and among which parties? What fairness considerations should be part of evaluating this question?

FINRA’s arbitration forum requires claims to be made within a certain defined time period of the occurrence or event giving rise to the claim. A time limit on matters eligible for arbitration has existed since NASD adopted its first arbitration code in 1968.⁶⁵ The original purpose of this time limit, or “eligibility rule,” was to prevent aged claims from being brought into the arbitration forum and was informed by Rule 17a-4 under the Exchange Act, which generally requires broker-dealers to maintain records for at least six years.⁶⁶ 

The 1994 Task Force made several recommendations urging NASD to address issues of timeliness of claims, including suspending the eligibility rule for three years and, ultimately, repealing it; adopting procedures for arbitrators to resolve statute of limitations issues earlier in the case and based on applicable law; and prohibiting parties from litigating procedural arbitrability issues in court until after an award was rendered. 

These recommendations generated significant opposition from customers and members.⁶⁷ First, customers objected to a temporary repeal of the eligibility rule as it would result in disparate treatment of claims based solely on filing date. Members argued that if the eligibility rule was temporarily or permanently repealed, members would not be able to predict or manage the risk of exposure to very old claims. Second, customers and members believed that adopting a prehearing procedure for resolving statute of limitation issues would add unnecessary burdens and delays. In addition, they argued that requiring arbitrators to resolve statute of limitations issues based on applicable law would create a contractual limitation on the arbitrator’s authority to decide these issues and make it easier to overturn an arbitration award (as compared to the higher standard of judicial review in the absence of a contractual limitation). Finally, customers and members agreed that eligibility decisions should occur early in a case and should be final, but members wanted the decisions to be immediately reviewable in court.⁶⁸

In 1997, NASD took a different approach and filed proposed amendments that would have retained the six-year eligibility requirement and provided that, among other things, all claims filed would be eligible for arbitration unless the Director determined that the claim is ineligible.⁶⁹ However, the rule filing was ultimately withdrawn in light of the Supreme Court decision in Howsam.⁷⁰ In this decision, the Supreme Court held that “the applicability of the NASD time limit rule is a matter presumptively for the arbitrator, not for the judge.”⁷¹ Following Howsam, NASD adopted amendments to conform to the Supreme Court’s ruling to state explicitly that eligibility determinations are made by arbitrators and to provide additional notice and guidance to parties on this issue.⁷²

FINRA Rules 12206 and 13206 (Time Limits) provide that a claim is not eligible for submission to arbitration where six years have elapsed from the occurrence or event giving rise to the claim.⁷³ The eligibility rule applies to all arbitration claims, including those requesting expungement of customer dispute information. The eligibility rule does not extend applicable statutes of limitations and does not apply to any claim that is directed to FINRA arbitration by a court of competent jurisdiction upon request of a member or associated person.⁷⁴ However, when a claimant files a FINRA arbitration claim, any time limits for the filing of the claim in court will be tolled while FINRA retains jurisdiction of the claim.⁷⁵ If a party submits a claim to a court of competent jurisdiction, the six-year time limitation in the FINRA eligibility rule will not run while the court retains jurisdiction of the claim matter.⁷⁶ The panel will resolve any questions regarding the eligibility of a claim.⁷⁷ In addition, a party whose claim is dismissed pursuant to Rule 12206 or 13206 may still pursue their claim in court.⁷⁸

In 2021, FINRA issued a reminder to members that when using predispute arbitration agreements for customer accounts, FINRA rules establish minimum disclosure requirements and prohibit predispute arbitration agreements from including conditions that, among other things, limit or contradict FINRA rules.⁷⁹ In particular, FINRA explained that “[s]ome customer agreements attempt to shorten or extend applicable statutes of limitations.”⁸⁰ FINRA reiterated that Rule 12206 allows arbitration claims to be submitted unless six years have elapsed from the occurrence or event giving rise to the claim, and that the arbitrator or panel resolves any questions regarding the eligibility of a claim under Rule 12206 or under an applicable state statute of limitations.⁸¹ Thus, FINRA clarified that customer agreements may not be used to shorten or extend statutes of limitations or require that a question of whether a time limitation applies be judicially determined instead of being submitted to an arbitrator or panel.⁸²

Over the years, FINRA has developed training and other materials intended to educate arbitrators on the eligibility rule. For example, FINRA’s Basic Arbitrator Training Program transcript explains that “[a] claim is not eligible for arbitration when six years have elapsed since the event giving rise to the claim.”⁸³ The transcript informs arbitrators that they should consider whether a continuing occurrence or event is giving rise to the dispute, such as when a customer may have purchased stock 10 years ago, but alleges ongoing fraud starting with the purchase which continued to a date within six years of the claim’s filing date.⁸⁴ The transcript clarifies that the eligibility rule is separate from any state or federal time limits for filing a claim, and that even if a claim is filed within the six-year eligibility period, federal or state statutes may preclude an award for events during the six-year period.⁸⁵ The transcript states whether statutes of limitations are applicable depends on the nature of the allegations and the law of the relevant jurisdiction, and arbitrators may ask parties for instructions on these issues.⁸⁶

In response to the rule modernization Notices, FINRA has received diverse comments on the eligibility rule. Broadly, some feedback advocated that FINRA should eliminate the eligibility rule.⁸⁷ Other feedback argued that the eligibility rule should be treated as a statute of repose, not a statute of limitations (i.e., all securities transactions or wrongful events that occurred prior to six years from the date a claim is filed should not be eligible for FINRA arbitration).⁸⁸ Relatedly, concerns were expressed that FINRA’s guidance regarding the eligibility rule is overbroad.⁸⁹

Over the years, differing views have been expressed regarding when the six-year time limit should begin to run. Some assert that, because the plain language of the eligibility rule does not indicate that the six-year time limit begins to run on the date of the transaction or purchase, arbitrators may interpret the eligibility rule to allow claims in FINRA’s arbitration forum where a customer purchased a security more than six years before the claim was filed. Some assert that the eligibility rule is akin to a statute of limitations, which are typically subject to tolling at the arbitrators’ discretion in cases where there is fraudulent concealment or when the customer did not discover the alleged misconduct or injuries until months or years after the fact. Some argue that where damages are an element of the claim alleged, a claim does not begin to accrue until a customer suffers damages, and that ongoing damages within a six-year period make a claim eligible for arbitration.

On the contrary, others assert that the eligibility rule should be a strict eligibility requirement or statute of repose and bar claims that arose from transactions or wrongful events that occurred more than six years prior to a claim being filed in FINRA’s arbitration forum. Some assert that the claim must be brought within six years of the purchase of a security or date of the transaction, which aligns with the SEC’s requirement that broker-dealers maintain records of all purchases and sales of securities for six years. 

Some argue that claims should be dismissed on eligibility grounds early in proceedings to prevent the costs associated with protracted arbitration. Others assert that an inherent conflict exists when arbitrators are permitted to determine the eligibility of claims, where denying a motion to dismiss based on eligibility means that the case will continue and the arbitrator will benefit by way of experience and compensation.

Request for Comment 

B(i).1. Should FINRA eliminate the eligibility rule and allow eligibility to be determined solely by applicable statutes of limitations? What would be the impacts on parties, if any, including on recordkeeping burdens and forum accessibility? What fairness considerations should be part of evaluating this question?

B(i).2. Should FINRA amend the eligibility rule to expressly allow claims in FINRA’s arbitration forum that arise from transactions or wrongful events that occurred more than six years prior to the claim being filed if, for example, there are ongoing damages or concealment of the harm? What fairness considerations should be part of evaluating this question?

B(i).3. Should FINRA amend the eligibility rule to expressly provide that the rule is a statute of repose, barring claims based on securities transactions or wrongful events that occurred more than six years before a claim is filed? How would this approach affect claims related to a continuing occurrence (e.g., allegations of ongoing fraud starting with the purchase of a stock 10 years ago but continuing to a date within six years of the date the arbitration claim was filed)? What fairness considerations should be part of evaluating this question?

B(i).4. Are there other approaches to the applicability of the eligibility rule that FINRA should consider?

FINRA’s arbitration forum is intended to be both fair and efficient. Extensive use of dispositive motions, as in court, can hamper an efficient arbitration process. Thus, Rules 12504 and 13504 specify procedures that govern motions to dismiss, which are requests made to the arbitration panel to remove a party or some or all claims raised by a party filing a claim. FINRA rules permit a panel to grant a motion to dismiss a party’s case after the conclusion of the case in chief.⁹⁰ However, motions to dismiss a claim prior to the conclusion of a party’s case in chief are discouraged in arbitration.⁹¹

Among other requirements, parties must file prehearing motions to dismiss in writing, separately from the answer, and only after they file the answer.⁹² The full panel of arbitrators must decide a motion to dismiss,⁹³ and the panel may not grant a motion to dismiss unless a prehearing conference on the motion is held or waived by the parties.⁹⁴ If a panel grants a motion to dismiss, the decision must be unanimous and accompanied by a written explanation.⁹⁵ If the panel denies a motion to dismiss, the moving party may not re-file the denied motion, unless specifically permitted by panel order.⁹⁶ In addition, if the panel denies a motion to dismiss, the panel must assess forum fees associated with hearings on the motion against the moving party.⁹⁷ If the panel deems a motion to dismiss as frivolous, the panel must also award reasonable costs and attorneys’ fees to any party that opposed the motion.⁹⁸ The panel also may issue other sanctions under Rules 12212 and 13212 if it determines that a party filed a motion to dismiss in bad faith.⁹⁹

Rules 12504 and 13504 provide that a panel cannot act upon a prehearing motion to dismiss a party or claim unless the panel determines that: (1) the non-moving party previously released the claims in dispute by a signed settlement agreement or written release; (2) the moving party was not associated with the account, security or conduct at issue; or (3) the non-moving party previously brought a claim regarding the same dispute against the same party that was fully and finally adjudicated on the merits and memorialized in an order, judgment, award or decision.¹⁰⁰ 

FINRA implemented procedures to govern motions to dismiss following complaints that parties were filing prehearing motions routinely and repetitively in an apparent effort to delay scheduled hearing sessions on the merits, increasing customers’ costs to defend against these motions.¹⁰¹ The amendments were intended to balance competing interests—a party’s right to have their claim heard by a panel against a party’s right to challenge a claim they believe lacks merit.

The 2014 Task Force heard concerns that FINRA rules were not sufficiently deterring abusive motion practice and reviewed statistical data on the number of prehearing motions to dismiss.¹⁰² The 2014 Task Force determined that the rules appeared to be working as intended and there was no evidence of abuse of the current rules; thus, the task force did not recommend any action.¹⁰³ In addition, the 2014 Task Force addressed concerns that the current motions to dismiss rules were too restrictive, and recommended adding a category for which motions to dismiss may be made before the conclusion of the case in chief, i.e., where the dispute has been previously concluded through adjudication or arbitration and memorialized in an order, judgment, award or decision.¹⁰⁴ In response, in 2017, FINRA amended Rules 12504 and 13504 to provide that arbitrators may act upon a motion to dismiss a party or claim prior to the conclusion of a party’s case in chief if the arbitrators determine that the non-moving party previously brought a claim regarding the same dispute against the same party, and the dispute was fully and finally adjudicated on the merits and memorialized in an order, judgment, award or decision.¹⁰⁵

In response to the rule modernization Notices, FINRA has received feedback that it should amend its rules to expand the circumstances under which the panel may act upon a prehearing motion to dismiss a party or claim (e.g., motions filed by clearing firms based on the nature of their operations),¹⁰⁶ and by permitting parties to file motions to dismiss before the answer due date.¹⁰⁷ Conversely, FINRA has received other feedback opposing any expansion of the grounds for motions to dismiss.¹⁰⁸ 

Request for Comment

B(ii).1. Should FINRA change the timing or expand the circumstances under which the panel may act upon a prehearing motion to dismiss a party or claim? If so, what should those changes be? What customer protection and fairness considerations should be part of evaluating this question?

Decisions in FINRA’s arbitration forum are made by independent arbitrators.¹⁰⁹ FINRA seeks to recruit candidates from a variety of backgrounds and areas of professional expertise.¹¹⁰ Although previous legal experience is not required to serve as an arbitrator, FINRA has focused on recruiting more attorneys to serve as arbitrators.¹¹¹

Prior to May 24, 2025, FINRA required new arbitrators to have a minimum of five years of paid business or professional employment experience (or a combination of both), either inside or outside of the securities industry, and to have completed at least two years of college-level credits from an accredited institution (i.e., 60 credits). Effective May 24, 2025, FINRA changed the employment and educational qualifications for new arbitrators such that applicants must have a four-year college degree and at least five years of full-time paid professional work experience, either inside or outside of the securities industry.¹¹² Notwithstanding meeting the employment and educational qualifications, in some instances, an individual may be temporarily or permanently disqualified from serving as a FINRA arbitrator.¹¹³ 

In response to the rule modernization Notices, FINRA has received feedback addressing arbitrator qualifications. Some feedback has recommended that FINRA consider additional steps to increase the number of arbitrators with arbitration process and subject matter expertise.¹¹⁴ Conversely, other feedback has urged FINRA to halt implementation of the new arbitrator qualifications and “focus on reforms that broaden, rather than narrow, access to a diverse and capable arbitrator pool.”¹¹⁵ 

Request for Comment 

C.1. What is the appropriate composition of the arbitrator roster in FINRA’s arbitration forum for customer disputes and intra-industry disputes? Should the arbitrator rosters be the same or different? Should FINRA continue to seek candidates from a variety of backgrounds, or should FINRA be guided more by other considerations such as specific types of expertise? 

C.2. What further changes, if any, should FINRA make to its arbitrator standards? How should FINRA identify minimum employment, experience and educational qualifications that would assure a broad candidate pool while maintaining its decision-making quality? For example, should FINRA accept equivalent professional certifications or specialized credentials in lieu of a four-year college degree? 

FINRA maintains three rosters of arbitrators: public arbitrators, non-public arbitrators, and arbitrators who are eligible to serve as chairperson of a panel.¹¹⁶ In general, a non-public arbitrator is a person who is otherwise qualified to serve as an arbitrator and is disqualified from service as a public arbitrator due to their current or previous association with the financial industry.¹¹⁷ A public arbitrator is a person who is not disqualified from service as a public arbitrator due to their current or past ties to the financial industry.¹¹⁸ An arbitrator is eligible to serve as a chairperson if they have completed FINRA’s chairperson training and (1) have a law degree and are a member of a bar of at least one jurisdiction and have served as an arbitrator through award on at least one arbitration administered by an SRO in which hearings were held; or (2) have served as an arbitrator through award on at least three arbitrations administered by an SRO in which hearings were held.¹¹⁹

To ensure fairness to all parties during arbitrator list selection, FINRA uses a computer algorithm, known as the list selection algorithm, to generate lists of arbitrators on a random basis from its rosters of arbitrators for the selected hearing location.¹²⁰ The number and composition of the arbitrator lists that are generated using the list selection algorithm varies depending on the nature of the dispute and whether it will be heard by a panel of three arbitrators or by a single arbitrator. For example, with respect to customer disputes with three arbitrators,¹²¹ FINRA uses the list selection algorithm to generate three lists: (1) a list of 10 public arbitrators from the FINRA chairperson roster (chairperson list); (2) a list of 15 arbitrators from the FINRA public arbitrator roster (public list); and (3) a list of 10 arbitrators from the FINRA non-public arbitrator roster (non-public list).¹²² 

Once the lists of arbitrators are generated,¹²³ the Director sends the lists to the parties.¹²⁴ The parties then select their arbitrators through a process that involves striking and ranking the arbitrators on the lists. In customer disputes with three arbitrators, each separately represented party may strike up to four of the arbitrators from the chairperson list and up to six of the arbitrators from the public list for any reason.¹²⁵ In addition, each separately represented party may strike any or all of the arbitrators from the non-public list for any reason.¹²⁶ By striking all the arbitrators on the non-public list, any party may ensure that the panel will have three public arbitrators.¹²⁷

In 2025, 140 arbitration cases involving customer disputes decided by three arbitrators closed by award in FINRA’s arbitration forum. Of these, 109 cases were decided by three public arbitrators (all-public panels) and 31 were decided by two public arbitrators and one non-public arbitrator (majority-public panels). Customers were awarded damages in 35 percent of cases (or 38 of 109 cases) decided by all-public panels and 29 percent of cases (or 9 of 31 cases) decided by majority-public panels.¹²⁸

In response to the rule modernization Notices, FINRA received feedback that it should reclassify certain non-public arbitrators as public to expand the public roster.¹²⁹ FINRA also received feedback that it should revise Rule 12403, which currently provides that parties in customer disputes with three arbitrators may strike any or all of the arbitrators from the non-public list for any reason.¹³⁰ FINRA also received feedback that all claimants, collectively, and all respondents, collectively, should share the same number of strikes during arbitrator selection.¹³¹

Request for Comment 

D.1. Should FINRA amend the definition of “public arbitrator” provided in Rules 12100(aa) and 13100(x) to modify or remove any of the criteria that disqualify an arbitrator from service as a public arbitrator to expand the public roster? If so, which criteria and why?

D.2. Should FINRA amend Rule 12403(c)(1)(A) to remove parties’ ability to strike all the arbitrators from the non-public list for any reason? What customer protection and fairness considerations should be part of evaluating this question?

D.3. At initial panel selection, should each separately represented party strike and rank arbitrators, or should FINRA amend its rules to provide that all claimants, collectively, and all respondents, collectively, share the same number of strikes during arbitrator selection? 

D.4. To increase parties’ choice of arbitrators during the selection process, should FINRA increase the number of arbitrators on each list and the proportional number of strikes for each list?

FINRA is committed to training arbitrators regarding the arbitration process so that they understand their role, authority and responsibilities in performing their arbitral duties. To that end, arbitrators are not eligible to serve on FINRA arbitration cases until they have successfully passed the Basic Arbitrator Training Program.¹³² The first 15 modules of the program cover each stage of the arbitration process and review the procedures that arbitrators must follow to successfully serve on an arbitration case. The final module of the program covers the expungement process, which includes a separate, required assessment. In addition to the required Basic Arbitrator Training Program, FINRA requires advanced training for arbitrators to qualify as chairpersons¹³³ and for certain arbitrators who decide certain requests to expunge customer dispute information.¹³⁴

In addition to the required training, FINRA provides voluntary training and other resources to further educate arbitrators. After successfully completing the Basic Arbitrator Training Program, arbitrators may attend a voluntary orientation to meet FINRA staff and ask questions about serving on the roster.¹³⁵ Arbitrators may also complete other voluntary, subject-specific training modules that are available on FINRA’s website.¹³⁶ The Arbitrator’s Guide is another resource for arbitrators that contains information about FINRA’s arbitration forum, policies and procedures.¹³⁷

FINRA periodically provides updates and reminders to arbitrators regarding FINRA rules and procedures by way of Neutral Workshop videos and a quarterly newsletter, The Neutral Corner, both of which are available on FINRA’s website.¹³⁸ Similarly, FINRA sends a monthly email notification to FINRA arbitrators that provides updates on rule proposals and training opportunities, among other things.¹³⁹ 

As neutral administrator of the arbitration forum, FINRA does not have any input into the outcome of arbitrations and decisions are made by the independent arbitrators selected by the parties. Thus, any training that FINRA currently provides to arbitrators is focused on procedural matters.¹⁴⁰

In response to the rule modernization Notices, FINRA has received varied feedback about whether it should implement enhanced training and continuing education requirements for all arbitrators, including with respect to substantive elements of the law.¹⁴¹ FINRA also received feedback that it should address poorly performing arbitrators by, for example, providing additional training.¹⁴²

Request for Comment

E.1. Should FINRA implement additional training requirements on the arbitration process for all arbitrators beyond the Basic Arbitrator Training Program? If so, what elements should be added or reinforced?

E.2. Should FINRA implement additional training requirements for arbitrators who decide certain categories of claims (e.g., of a certain complexity or dollar amount) beyond the Basic Arbitrator Training Program (e.g., like how certain arbitrators must complete the enhanced expungement training FINRA provides prior to considering certain requests to expunge customer dispute information)? If so, what should that training encompass? Should it be focused on process issues or include substantive elements?

E.3. Should FINRA implement additional training requirements on substantive elements of law or complex investment products for all arbitrators beyond the Basic Arbitrator Training Program? If so, would this raise concerns from forum participants with respect to FINRA maintaining neutrality as the administrator of the forum?

E.4. To what extent should additional training be voluntary versus mandatory? What might be the potential impact on arbitrators’ willingness to serve in FINRA’s arbitration forum if FINRA imposes additional mandatory training requirements to serve on cases in FINRA’s arbitration forum?

As noted above, discussions regarding potential updates to FINRA’s discovery rules and procedures—including the Discovery Guide—remain ongoing with input from the NAMC and its Discovery Subcommittee.¹⁴³ These discussions have included how to address concerns commenters raised in response to the rule modernization Notices. For example, in response to commenters, FINRA is developing a voluntary meet and confer program at the outset of an arbitration for parties to discuss discovery issues.¹⁴⁴ In addition, discussions are underway to address challenges related to e-discovery¹⁴⁵ and discovery abuses such as frivolous or boilerplate objections that cause delays in producing relevant documents.¹⁴⁶

Also in response to the rule modernization Notices, FINRA received feedback that it should establish a process for arbitrators to escalate certain discovery issues (e.g., related to privilege) to, for example, a specialized person or group;¹⁴⁷ conversely, others asserted such a process would increase complexity and delay the arbitration proceedings.¹⁴⁸ FINRA also received feedback that it should limit the number and scope of document requests, require arbitrators to set and enforce discovery cutoff dates, and implement a higher standard of need for additional discovery requests;¹⁴⁹ conversely, others asserted that FINRA should not implement recommendations that limit discovery.¹⁵⁰ Finally, FINRA received feedback that respondents in customer arbitrations be required to disclose, in confidence during discovery (i.e., the information is inadmissible at the hearing), the existence and extent of any insurance coverage.¹⁵¹

Parties may request discovery of documents, names of witnesses and other information from each other to prepare their cases for the arbitration hearing. Parties must cooperate to the fullest extent practicable in the exchange of documents and information to expedite the arbitration.¹⁵²

With respect to customer disputes, FINRA provides a Discovery Guide to supplement the discovery rules and help guide the parties and arbitrators through the discovery process.¹⁵³ The Document Production Lists, which are included in the Discovery Guide and described in Rule 12506, outline presumptively discoverable documents that the parties should exchange without arbitrator or FINRA staff intervention in all customer arbitrations (except in certain simplified customer arbitrations, unless the customer requests that the Document Production Lists apply).¹⁵⁴ Document Production List 1 outlines the documents that members and associated persons shall produce; Document Production List 2 outlines the documents that customers shall produce.¹⁵⁵ Unless the parties agree otherwise, parties must respond to the Document Production Lists within 60 days of the answer due date.¹⁵⁶ A party must act in good faith when responding to the Document Production Lists and establish a reasonable timeframe to produce a document if it cannot be timely produced.¹⁵⁷ In addition to the Document Production Lists, parties may make other discovery requests.¹⁵⁸

With respect to all disputes, parties may make written discovery requests.¹⁵⁹ Requests for information are generally limited to identification of individuals, entities and time periods related to the dispute; they should also be reasonable in number and not require narrative answers or fact finding.¹⁶⁰ Requests for documents or information should be specific and relate to the matter in controversy.¹⁶¹ Standard interrogatories are generally not permitted in arbitration,¹⁶² and depositions are strongly discouraged.¹⁶³ Parties may serve a discovery request on a party 45 days or more after the statement of claim is served on that party,¹⁶⁴ and unless the parties agree otherwise, a party must respond within 60 days of receipt.¹⁶⁵ A party must act in good faith when responding to discovery requests and establish a reasonable timeframe to produce a document if it cannot be timely produced.¹⁶⁶ 

If a party objects to production, the party must specifically identify in writing which document or requested information it is objecting to and why.¹⁶⁷ If a party objects to production or otherwise fails to comply with FINRA rules related to discovery requests, another party may make a motion to compel asking the panel to order production.¹⁶⁸ Motions to compel discovery must include, among other things, a description of the moving party’s efforts to resolve the issue before making the motion.¹⁶⁹

FINRA provides training and other resources to arbitrators regarding the discovery process.¹⁷⁰ For example, the mandatory Basic Arbitrator Training Program (discussed above) includes a module dedicated to the IPHC and discovery process. The learning objectives of this module include, among other things, understanding the discovery process and timelines; ruling on discovery requests based on the papers; and imposing discovery sanctions when a party fails to provide sufficient information or documents.¹⁷¹ In addition, FINRA requires advanced training for arbitrators to qualify as chairpersons.¹⁷² The chairperson training includes modules dedicated to discovery issues and prehearing discovery conferences.¹⁷³ Arbitrators may also complete other voluntary, subject-specific training modules that are available on FINRA’s website, including a course titled “Discovery, Abuses and Sanctions.”¹⁷⁴ 

FINRA also provides guidance to parties regarding the discovery process including, for example, a web page providing an overview of discovery, information in the Party’s Reference Guide and a video that was recently published on FINRA’s website titled “What to Expect During the Discovery Process.”¹⁷⁵

Request for Comment 

F.1. Are the Document Production Lists in the Discovery Guide appropriately tailored to facilitate the efficient exchange of relevant information in customer arbitrations? Do the Document Production Lists impose burdens associated with overly broad or duplicative document production requirements?

F.2. Should FINRA establish a process or resource to assist arbitrators in resolving complex discovery disputes? Would such a mechanism improve consistency and efficiency, or would it create routine delays and undermine arbitrator decision making? 

F.3. Should FINRA impose limitations or heightened standards for making discovery requests beyond the Document Production Lists? How should FINRA balance efficiency and cost effectiveness of the arbitration process with parties’ desire to obtain more information to present their cases?

F.4. Should FINRA amend the Discovery Guide—and more specifically, Document Production List 1—to require members and associated persons in customer disputes to produce, on a confidential basis during discovery, documents concerning the existence and extent of any insurance coverage? How would this impact the efficiency and fairness of the arbitration process?

F.5. Should FINRA consider additional methods to address discovery abuses? If so, what methods should be considered?

In response to the rule modernization Notices, FINRA has received feedback that, to improve the efficiency of arbitration proceedings, FINRA should establish a central contact point to assist arbitrators with procedural or evidentiary questions during proceedings.¹⁷⁶ In addition, FINRA has received feedback that it should establish more stringent parameters for both oversight of hearings by arbitrators¹⁷⁷ and FINRA oversight of arbitrators.¹⁷⁸

Expeditious resolution of disputes is one of the principal goals of arbitration. For example, FINRA Rules 12501 and 13501 (Other Prehearing Conferences) provide that the panel may schedule a prehearing conference regarding any outstanding preliminary matters, including any other matter that will simplify or expedite the arbitration. In addition, Rules 12505 and 13505 provide that parties must cooperate to the fullest extent practicable in the exchange of documents and information to expedite the arbitration.

To aid arbitrators in administering hearings efficiently, FINRA periodically provides resources and reminders to arbitrators so that they understand their role, authority and responsibilities in performing their arbitral duties.¹⁷⁹ Arbitrators can also advance this goal by scheduling evidentiary hearings within nine months or less after the IPHC,¹⁸⁰ refraining from postponing hearings on their own accord,¹⁸¹ and managing the time during hearings to minimize, whenever possible, the number of hearing sessions held.¹⁸² In addition, the chairperson is authorized to act on behalf of the panel in issuing subpoenas, directing appearances, ordering the production of documents and information, setting deadlines and issuing any other order that may serve to expedite the process and permit any party to develop its case fully.¹⁸³

FINRA also uses technology to support the efficient administration of arbitration proceedings. For example, FINRA uses an internal, web-based computer system—the Mediation and Arbitration Tracking and Retrieval Interactive Case System—to manage all arbitration and mediation cases in the forum and to maintain FINRA’s neutral rosters. In addition, FINRA provides the Dispute Resolution Portal (DR Portal), which is a self-service system that allows participants in an arbitration or a mediation to log into a secure area of the FINRA website to submit documents and manage case information. The DR Portal has two parts: the Arbitrator and Mediator Portal for arbitrators and mediators¹⁸⁴ and the Party Portal for parties and their representatives.¹⁸⁵ To enhance efficiencies for parties and expedite case administration, FINRA amended its rules to require all parties, except pro se customers,¹⁸⁶ to use the Party Portal to submit documents and view arbitration case information and documents in most instances.¹⁸⁷ 

Finally, with respect to FINRA’s oversight of arbitrators on its roster, FINRA has a longstanding process to help assure that arbitrators meet the highest standards of ethical conduct, competence and impartiality. After undergoing a thorough application process and training, FINRA conducts ongoing arbitration performance monitoring and, when necessary, arbitrator counseling or removal.¹⁸⁸ FINRA monitors the performance of arbitrators through multiple feedback channels.¹⁸⁹

Request for Comment 

G.1. Should FINRA establish a central contact point or support system to assist arbitrators with procedural or evidentiary questions during proceedings? What should that resource look like? How should FINRA balance the possibility of that resource improving efficiency and consistency with the possibility that it could result in delays or undermine arbitrator decision making?

G.2. Should FINRA implement more stringent case management requirements? If so, what would those requirements look like and how should possible gains in efficiency be balanced with a party’s ability to present their case?

G.3. Should FINRA increase its direct oversight of arbitrators and arbitration proceedings to identify and address case management and other issues in real time? If so, how should these issues be addressed? 

G.4. What technological enhancements to FINRA’s dispute resolution systems (e.g., the DR Portal) would further improve case efficiency, accessibility or user experience? Are there further features that FINRA should consider implementing?

As discussed below, FINRA rules allow arbitrators to award punitive damages in FINRA’s arbitration forum. However, whether there should be limitations on such awards in the forum has long been the subject of debate. 

Since 1989, SRO rules have required that arbitration awards contain the damages and other relief awarded and that predispute arbitration agreements cannot limit the ability of arbitrators to make any award (including an award of punitive damages). Specifically, in 1989, the Commission issued an order approving proposed rule changes by NASD, NYSE and the American Stock Exchange, Inc. (AMEX) relating to the arbitration process—for example, the content of arbitration awards—and the use of predispute arbitration clauses in customer agreements.¹⁹⁰ As a result, NASD, NYSE and AMEX amended their respective rules to provide that awards shall contain, among other things, the damages and other relief awarded.¹⁹¹ “The Commission requested such a rule in [a] September 1987 letter” to the Securities Industry Conference on Arbitration (SICA).¹⁹² Today, FINRA Rules 12904 and 13904 (Awards) provide that the award shall contain the damages and other relief awarded. 

In addition, NASD, NYSE and AMEX amended their respective rules to impose specific disclosures and other requirements when using predispute arbitration clauses in customer agreements.¹⁹³ For example, the amendments prohibited the use of any language in a predispute arbitration clause in a customer agreement that limited the ability of arbitrators to make any award under the arbitration rules of an SRO and applicable law.¹⁹⁴ In the approval order, the Commission stated that predispute arbitration clauses in customer agreements “cannot be used to curtail any rights that a party may otherwise have had in a judicial forum” and “[i]f punitive damages . . . would be available under applicable law, then the agreement cannot limit parties’ rights to request them, nor arbitrators’ rights to award them.”¹⁹⁵ Today, requirements when using predispute arbitration clauses in customer agreements are in Rule 2268. Rule 2268(d)(4) provides that no customer predispute arbitration agreement shall include any condition that limits the ability of arbitrators to make any award. 

However, the award of punitive damages by arbitrators in NASD arbitration remained controversial. As a result, at its May 1994 meeting, the NASD Board approved issuing a Notice to Members soliciting comment on a report developed by the Subcommittee on Punitive Damages of the NASD Legal Advisory Board (Punitive Damages Subcommittee) that studied possible approaches for governing the award of punitive damages in NASD arbitration.¹⁹⁶ The Punitive Damages Subcommittee’s report recommended that NASD limit punitive damages in arbitration and institute a series of procedures to guide arbitrators including, for example, that NASD require written decisions in all cases of punitive damages; institute a right to appeal an award of punitive damages; enhance arbitrator qualification, training and guidance; bifurcate proceedings for the determination on punitive damages; and place a cap on punitive damages awards. In publishing Notice to Members 94-54, NASD stated its “objective [was] to develop an approach toward the award of punitive damages that will be fair to all arbitration participants.” The NASD Board believed the report “provide[d] a useful framework for discussing this controversial area.” NASD “urge[d] commenters to consider the manner in which implementation of the individual recommendations would affect both claimants and respondents” and “welcome[d] any additional approaches that commenters believe[d] would help achieve a fair balance of the interests of arbitration participants.” NASD also noted how the NAMC (then the National Arbitration Committee) had been studying the issue of punitive damages and independently considered several of the approaches discussed in the report. Simultaneously, the 1994 Task Force was considering whether punitive damages should be awarded in securities arbitration cases.¹⁹⁷

In 1995, the Supreme Court addressed the availability of punitive damages in securities arbitration in a case involving NASD’s arbitration forum.¹⁹⁸ In enforcing the award of punitive damages to the customer, the Court cited an NASD rule (the progenitor of Rule 12904¹⁹⁹) providing that arbitrators may award “damages and other relief,” and determined this language to be broad enough to include punitive damages.²⁰⁰ 

After the 1994 Task Force deliberation, NASD in 1997 filed with the SEC a proposed rule change to limit punitive damage awards to two times compensatory damages or $750,000, whichever was less.²⁰¹ This proposed rule change was related to a recommendation from the 1994 Task Force, which deemed treatment of punitive damages as “the most controversial and polarizing issue” considered by the task force.²⁰² NASD ultimately withdrew the proposed rule change in May 2003.²⁰³ 

In addition, NASD in 1998 filed with the SEC a proposed rule change to amend NASD’s rule governing the use of predispute arbitration agreements with customers (then, NASD Rule 3110).²⁰⁴ Originally, NASD proposed, among other things, that NASD Rule 3110(f)(1) require new disclosures that (1) no choice-of-law provision in an agreement may limit the availability of punitive damages obtainable under the rules of the arbitration forum and applicable state law, and (2) in some arbitration fora, punitive damages might be capped at the lesser of twice compensatory damages or $750,000, unless the parties agree to a greater amount. However, NASD amended the proposed rule change to delete these disclosures so that all rule provisions relating to punitive damages could be separately considered in the 1997 punitive damages filing (discussed above). 

In approving the 1998 proposed rule change as amended, the Commission stated NASD Rule 3110(f)(4)(A)—providing that no predispute arbitration agreement shall include any condition that limits the ability of arbitrators to make any award—“achieves an appropriate balance between the interests of investors and the ability of parties to agree contractually to fair terms that would govern their disputes, especially as explained in NASD Notice to Members 95-85.”²⁰⁵ The Commission cited Mastrobuono and the Supreme Court’s ruling “that the choice of law provision in the customer agreement before the Court did not have the effect of barring arbitrators from [awarding] punitive damages” and stated “Rule 3110(f)(4) explicitly forbids broker-dealers from using any term of an agreement to limit such relief.”²⁰⁶

As discussed above, Rules 12904 and 13904 provide that awards must contain “[t]he damages and other relief awarded.”²⁰⁷ In addition, although FINRA rules do not expressly provide that arbitrators may award punitive damages, Rule 2268(d) provides that no customer predispute arbitration agreement shall include any condition that “limits or contradicts the rules of any [SRO],” “limits the ability of a party to file any claim in arbitration,” or “limits the ability of arbitrators to make any award.” Over the years, FINRA has also periodically reminded its members about requirements when using predispute arbitration agreements for customer accounts, including that such agreements cannot limit the ability of arbitrators to award punitive damages.²⁰⁸ 

Upon a party’s request, arbitrators may consider punitive damages as a remedy if a respondent has engaged in serious misconduct that meets the standards for such an award. When asserting a claim for punitive damages, a party may put forth an argument that the governing law set forth in the parties’ agreement provides for punitive damages. Conversely, if under the governing law set forth in the parties’ agreement punitive damages are not available in court, a party may assert this as a defense in an arbitration proceeding to a claim for punitive damages. The arbitrators determine based on the parties’ arguments whether, or to what extent, to accept a claim or defense relating to punitive damages.²⁰⁹

If punitive damages are awarded in a FINRA arbitration case, the arbitrators must clearly specify what portion of the award is intended as punitive damages and include the basis for awarding punitive damages.²¹⁰ If a panel needs additional information to determine the basis for awarding punitive damages, the panel should ask the parties to brief the issue to help determine whether both factual and legal bases exist for such an award.²¹¹ 

Punitive damages have been awarded in a very small percentage of cases in FINRA’s arbitration forum. From March 1988 through December 2025, approximately 47,835 awards have been rendered in FINRA’s arbitration forum.²¹² Of the 47,835 awards issued in nearly 38 years, only 3 percent (or 1,324 awards) included an award of punitive damages. 

Arbitration awards in FINRA’s arbitration forum, including punitive damages awards, are considered final and binding.²¹³ The only avenue for challenging an adverse FINRA arbitration award is to file a timely motion in a court of competent jurisdiction to vacate, modify or correct the award. The grounds for appealing an arbitration award are narrow.²¹⁴

In response to the rule modernization Notices, FINRA has received feedback that it should limit arbitrators’ ability to award punitive damages given “FINRA arbitration lacks the necessary procedural safeguards for awarding punitive damages.”²¹⁵ FINRA also received feedback that it should “amend Rule 2268(d)(4) to permit parties to agree in their predispute arbitration agreements to preclude or limit punitive damages in FINRA arbitration, so long as it is allowed under applicable state law” or, alternatively, “FINRA should impose specific caps on punitive damages awards” by, for example, “requiring awards to be below a certain amount [or] tied to a multiple of any compensatory damages award.”²¹⁶ Conversely, FINRA has received feedback that it should not limit punitive damages because “if customers are forced to bring their claims against the securities industry in arbitration, the arbitrators should be entitled to award any relief the customers would be entitled to if their claim was filed in court.”²¹⁷

Request for Comment

H.1. Should FINRA maintain the current framework that allows arbitrators to award punitive damages?

H.2. Should FINRA permit parties to agree in predispute arbitration agreements to preclude or limit punitive damages? What customer protection and fairness considerations should be part of evaluating this question? 

H.3. Should FINRA impose a cap on punitive damages awards to address concerns about excessive awards in the absence of judicial safeguards? If so, how should FINRA structure such a limitation or cap? What customer protection and fairness considerations should be part of evaluating this issue?

H.4. Are there procedural safeguards—such as bifurcated hearings for liability and damages, enhanced standards for awarding punitive damages, or mandatory explained decisions²¹⁸ when punitive damages are awarded—that FINRA should consider in response to this issue? Are there other procedural safeguards FINRA should consider? What customer protection and fairness considerations should be part of evaluating this question?

H.5. For some types of claims in FINRA’s arbitration forum, FINRA requires arbitrators to have additional qualifications to be eligible to serve on a panel considering such claims.²¹⁹ Should FINRA require that arbitrators considering requests for punitive damages have additional experience and qualifications? If so, what would be appropriate additional experience and qualifications? What customer protection and fairness considerations should be part of evaluating this question?

H.6. Should FINRA develop an arbitration appeals process relating to awards of punitive damages? If so, what should such a process look like? For example, should both the amount of the award and the decision itself to award punitive damages be appealable? Should any party be able to appeal or only the party against whom punitive damages are assessed? Should arbitrators with specific experience and qualifications make up the appellate roster? If so, what would be appropriate additional experience and qualifications? What else should FINRA consider if it were to develop an arbitration appeals process relating to awards of punitive damages? Should FINRA consider an arbitration appeals process that is not limited only to a review of punitive damages awards (e.g., interim appeals of certain dispositive panel rulings)?²²⁰ What customer protection and fairness considerations should be part of evaluating these questions?

In FINRA’s arbitration forum, an award must contain, among other things, a summary of the issues, the damages and other relief requested and awarded, and a statement of any other issues resolved.²²¹ All arbitration awards are made publicly available.²²² 

FINRA rules provide that an award may contain a rationale underlying the award.²²³ In other words, arbitrators are permitted to decide on their own (or upon the motion of a party) to write an explained decision. FINRA rules also provide that arbitrators must provide an explained decision at the parties’ joint request.²²⁴ 

An explained decision is a fact-based award stating the general reasons for the arbitrators’ decision.²²⁵ Inclusion of legal authorities and damage calculations is not required.²²⁶ Parties are required to submit any joint request for an explained decision at least 20 days before the first scheduled hearing date.²²⁷ The chairperson of the panel writes the explained decision and receives an additional honorarium of $400.²²⁸ 

The requirement for arbitrators to provide an explained decision at the parties’ joint request has been in FINRA rules since 2009.²²⁹ When FINRA amended its rules in 2009, the rules provided that the arbitrators allocate the $400 cost for the explained decision (i.e., the additional $400 honorarium that the chairperson received for writing the explained decision pursuant to the parties’ joint request) to the parties.

The 2014 Task Force believed that expanding the use of explained decisions could increase transparency and confidence in the fairness of the system and recommended that FINRA require explained decisions unless any party notifies FINRA, prior to the IPHC, that it does not want an explained decision.²³⁰ As an alternative approach, and to remove a potential obstacle to parties requesting an explained decision, FINRA began waiving the $400 fee for an explained decision in January 2017 and, effective February 2018, FINRA amended its rules to eliminate the $400 fee for an explained decision.²³¹ Thus, FINRA pays the $400 honorarium to the chairperson without passing this cost on to the parties.

FINRA has received few requests for explained decisions. Since the explained decision amendments went into effect in 2009 until the end of 2016, parties made 40 joint requests for explained decisions (or an average of 5 joint requests per year).²³² Of the 40 requests, there were 32 explained decisions issued.²³³ Since waiving the $400 fee in January 2017 through December 31, 2025, parties made 34 additional joint requests for explained decisions (or an average of 4 joint requests per year). Of the 34 requests, 15 explained decisions were issued. Explained decisions were requested but not issued because either the cases settled or the requests were withdrawn.

In response to the rule modernization Notices, FINRA has received feedback that reasonably detailed explained decisions should be mandatory in all FINRA arbitration cases.²³⁴

Request for Comment 

I.1. Should FINRA require explained decisions in all, or certain categories of, arbitration cases? Would explained decisions increase transparency and improve the quality of decision-making and consistency among awards? What impact would explained decisions have on the finality of arbitration awards?

I.2. Should arbitrators be required to provide additional detail in explained decisions? If so, what information should be required?

I.3. If FINRA were to require explained decisions in all, or certain categories of, arbitration cases, what impact, if any, would there be on the efficiency of the program including case resolution timelines? 

I.4. Would mandatory or expanded use of explained decisions impact arbitrator recruitment and retention, particularly among chairperson-eligible arbitrators? If so, would higher compensation make up for the additional workload?

I.5. FINRA currently provides guidance to arbitrators on writing explained decisions.²³⁵ Should FINRA provide additional guidance or training? If so, what additional guidance or training would be most beneficial to arbitrators?

When a panel issues its decision in an arbitration proceeding, that decision must be in the form of a written award that complies with the requirements of Rule 12904 or 13904. These rules mandate that all awards be made publicly available and must include, among other information, the names of the parties and, if any, their representatives, a summary of the issues, the damages and other relief requested and awarded, an allocation of any applicable fees, the names of the arbitrators, the relevant dates from the proceeding, the location of the hearings, and the signatures of the arbitrators.²³⁶ 

In 2007, FINRA launched the Arbitration Awards Online (AAO) database, which allows users to perform web-based searches for FINRA arbitration awards.²³⁷ The AAO includes copies of all FINRA arbitration awards.²³⁸ Making FINRA arbitration awards publicly available provides transparency into FINRA’s arbitration process and provides a valuable resource to all parties in arbitrator selection.²³⁹ Although Rules 12904 and 13904 require that all awards be made publicly available, no FINRA rules provide FINRA with the authority to remove awards from AAO or redact information from awards published on AAO.

In response to the rule modernization Notices, FINRA received feedback that it should make arbitration awards searchable as they are in legal research platforms, like LexisNexis or Westlaw, rather than just providing PDF postings.²⁴⁰ Separately, FINRA has received feedback that it should amend its rules to allow it to remove awards from AAO, or redact information from awards published on AAO, such as when the information in the award has been expunged from the Central Registration Depository (CRD^®)²⁴¹ pursuant to a court order or court confirmation of a FINRA arbitration award containing expungement relief.²⁴²

Request for Comment

J.1. Who currently uses AAO and for what purposes?

J.2. Should FINRA consider amending its rules so that FINRA could remove awards from AAO or redact information from awards published on AAO? If so, in what circumstances would it be appropriate for FINRA to remove awards from AAO or redact information from awards published on AAO? What impact would such removal of awards or redaction of information from awards have on transparency into FINRA’s arbitration process and the utility of displaying awards to parties and users of AAO? What customer protection and fairness considerations should be part of evaluating these questions?

J.3. Currently, users can search AAO by arbitration case identification number, keyword, name, date of award (by date range), forum, document type, panel composition or a combination of search parameters. Awards can be viewed online, printed or downloaded as text-searchable PDF files. Are there ways in which FINRA could enhance the search capabilities of AAO to be more helpful to users?

Customers who pursue civil remedies in court or claims in arbitration against investment professionals cannot always recover on their judgments or awards. Customers encounter this challenge across the fora in which they may pursue action—whether state or federal court, a dispute resolution forum administered by a regulator, a private arbitration forum or otherwise—and across the range of financial services they may use. Confirmed arbitration awards may be collected using judicial remedies like civil judgments. Nonetheless, when a customer is unable to recover on a judgment or award, the customer may be left without any redress for the harm suffered.

FINRA rules require prompt payment of arbitration awards.²⁴³ FINRA suspends from membership (or association with a member) any member or associated person who fails to pay a final arbitration award, unless they have a defense to non-payment, such as that the award has been discharged in bankruptcy.²⁴⁴ Most unpaid customer arbitration awards are rendered against firms or individuals whose FINRA registration has been terminated, suspended, cancelled or revoked, or who have been expelled from FINRA.²⁴⁵ FINRA publishes a list of members and associated persons responsible for unpaid awards,²⁴⁶ and makes this information available to customers through the member’s or associated person’s BrokerCheck^® record. However, FINRA’s suspension for non-payment of awards applies only to the activities under FINRA’s jurisdiction and cannot prevent the person from continuing to work with retail customers in other parts of the financial services industry, such as by acting as an insurance broker or investment adviser.²⁴⁷ 

FINRA has been focused on this important issue for many years. In 2018, FINRA issued a Discussion Paper on customer recovery to encourage a continued dialogue about addressing the challenges of customer recovery across the financial services industry, including recovery in FINRA’s arbitration forum.²⁴⁸ FINRA has also focused on ways to strengthen its rules to reinforce payment of awards. For example, FINRA amended its Membership Application Program rules to create further incentives for the timely payment of awards.²⁴⁹ FINRA also amended its rules to expand a customer’s options to withdraw an arbitration claim (or take certain other steps) if a member or associated person becomes inactive before a claim is filed or during a pending arbitration.²⁵⁰ In addition, FINRA has taken steps to address members and associated persons with a significant history of misconduct, which may have important ancillary benefits for the payment of awards.²⁵¹ 

Arbitration cases decided by award represent a small subset of all cases filed.²⁵² For example, there were 1,852 arbitration cases involving customer disputes that closed in 2024, but only 12 percent (232 cases) closed by award. Another 70 percent (1,302 cases) settled prior to award, 11 percent (195 cases) were withdrawn, and 7 percent (123 cases) closed by other means (e.g., stipulated award, bankruptcy of critical party, uncured deficient claim, forum denied or stayed by court action). Of the 232 customer awards rendered in 2024, only 15 (1 percent of all cases) went unpaid.

Over the years, some have advocated that FINRA address unpaid awards by creating a national customer recovery pool and fund it with, for example, fine monies assessed against its members and associated persons or by assessments on its members.²⁵³ Conversely, others have opposed this approach, stating “it is unfair to the broker-dealers who honor their arbitration award obligations, is essentially a tax on investors, and introduces numerous moral hazards.”²⁵⁴ FINRA has also received feedback that it should require all members to maintain sufficient liability insurance to address unpaid awards.²⁵⁵FINRA identified these and other approaches to unpaid awards in its Discussion Paper on customer recovery and discussed related issues and questions, such as whether the approaches would require SEC rulemaking or federal legislation, or present policy issues that should be considered by the SEC or Congress.²⁵⁶ In addition, questions have been raised about the scope of FINRA’s authority to create a national customer recovery pool, and why any such pool should apply only to unpaid awards in FINRA’s arbitration forum when customers face unpaid judgments and awards regarding securities claims in other fora, such as in state or federal court or in private arbitration fora. 

There are other considerations in evaluating potential approaches to unpaid awards, such as how any approach would interact with other existing regulatory regimes. For example, broker-dealer capital requirements have long been set by the SEC through its financial responsibility rules, which generally govern the capital and other customer protection requirements applicable to broker-dealers. Similarly, the Securities Investor Protection Corporation was created by Congress to protect customers’ claims for securities entrusted to failed broker-dealers (or for cash entrusted to them in connection with transactions in securities). And the federal bankruptcy process is designed to enable an honest debtor to obtain relief from legal action, while ensuring creditors are treated fairly and receive payment through an orderly, court-supervised liquidation of assets or repayment plan.

In response to the rule modernization Notices, FINRA also received feedback that it should require any individual or entity that owns or controls a FINRA member to submit to FINRA jurisdiction; mandate that holding companies and control persons participate in FINRA arbitration pursuant to Rule 12200 where they are alleged to have responsibility for customer harm; and prohibit associated persons, owners and control entities from remaining in the industry if they are affiliated with firms that fail to pay arbitration awards.²⁵⁷

Request for Comment 

K.1. In its Discussion Paper on customer recovery,²⁵⁸ FINRA identified potential approaches to enhancing the resources available to pay awards, including policy considerations these approaches raise and the need for Congressional and SEC involvement or action. How should these approaches be considered? 

K.2. Are there any considerations not identified by FINRA in the Discussion Paper on customer recovery that should also be identified?

K.3. Are there other approaches that would enhance member resources to pay awards that FINRA should consider? What regulatory, legislative, or other steps would be required to implement those approaches?

In response to the rule modernization Notices, FINRA has received feedback that it should address issues with the adjudication of Form U5 (Uniform Termination Notice for Securities Industry Registration) defamation claims.²⁵⁹ This feedback said FINRA should provide guidance, training and instructions to arbitrators on the substantive elements of defamation claims.²⁶⁰ This feedback also indicated that before making an award of monetary damages for Form U5 defamation claims, arbitrators should be required to find expressly that the alleged defamatory statement is a false statement of fact and was made in bad faith and with malice in fact.²⁶¹ 

FINRA also received feedback that it should amend its rules to provide members with qualified or absolute immunity against Form U5 defamation claims.²⁶² With respect to customer dispute information, this feedback also said that FINRA should allow firms to request removal of demonstrably false complaints from an associated person’s Form U4, and FINRA should remove this information without a formal expungement proceeding.²⁶³

FINRA is mandated by federal statute to collect and maintain registration information about its members and their associated persons. To satisfy this statutory responsibility, FINRA operates CRD, the central licensing and registration system used by FINRA and its members, the SEC, other SROs and state securities regulators. The concept for CRD was developed by FINRA and NASAA, and NASAA and state securities regulators play a critical role in the ongoing development and implementation of CRD. 

In general, the registration information in CRD is reported by members, associated persons and regulatory authorities in response to questions on the uniform registration forms.²⁶⁴ These forms are used to collect registration information, which includes, among other things, administrative, regulatory, criminal history, financial and other information about associated persons. FINRA also makes much of the registration information reported to CRD publicly available through BrokerCheck.²⁶⁵

Forms U4 and U5 contain specific questions pertaining to the termination of a broker’s employment with a securities firm²⁶⁶ and certain customer dispute information.²⁶⁷ Under FINRA rules, firms are required to file Form U5 no later than 30 days after terminating an associated person’s registration.²⁶⁸

For allegedly untrue or misleading statements made on the Form U5, associated persons at times file claims in FINRA’s arbitration forum seeking expungement of such information from their CRD records²⁶⁹ or monetary damages under state law for defamation or wrongful termination or both. Similarly, associated persons at times file defamation claims with respect to allegedly untrue or misleading statements on the Form U4, which is required to be filed by registered persons upon the occurrence of certain events, but which in practice is often drafted by the member with which the individual is associated.²⁷⁰

If an associated person seeks expungement of Form U5 employment termination information in FINRA’s arbitration forum and a panel explicitly states in the award that expungement relief is based on the defamatory nature of the information, FINRA will expunge the information from CRD without a court order confirming the award. If the panel does not explicitly state in the award that the expungement relief is because the information is defamatory in nature, the party seeking expungement must confirm the award in a court of competent jurisdiction before FINRA will remove the information from CRD.²⁷¹ Arbitrators are not required to state explicitly in the award that they found all elements required to satisfy a claim in defamation under governing law have been met.²⁷² FINRA’s guidance to arbitrators on defamation claims is in this expungement context.²⁷³

Request for Comment

L.1. How should the regulatory need for the reporting of complete and accurate information to CRD be balanced with concerns from members regarding adverse arbitration awards based on required reporting and associated persons’ expectation for recourse if they believe the reported information is untrue or misleading?

L.2. Should FINRA amend its rules to require that before making an award of monetary damages for Form U5 defamation claims, arbitrators should be required to find that the alleged defamatory statement is a false statement of fact and was made in bad faith and with malice in fact? Is this the appropriate standard for damages claims based on allegations of defamation? Are there other standards FINRA should consider? 

L.3. Should FINRA implement guidance, training or instructions to arbitrators on the substantive elements of defamation claims? If so, what form should such guidance, training or instructions take given concerns regarding FINRA maintaining neutrality as the administrator of the forum?

L.4. For some types of claims in FINRA’s arbitration forum, FINRA requires arbitrators to have additional qualifications to be eligible to serve on a panel considering such claims.²⁷⁴ Should FINRA require that arbitrators considering Form U5 defamation claims have additional experience and qualifications? If so, what would be the appropriate additional experience and qualifications?

L.5. Should FINRA retain the long-standing position that it will expunge from CRD without a court order employment termination information if a panel explicitly states in the award that the basis for expungement is the defamatory nature of the information? Should FINRA apply a different standard to requests to expunge employment termination information?

L.6. Should FINRA and other regulators revisit the question of providing members with further immunity against Form U5 defamation claims? If FINRA and other regulators were to revisit such a proposal, what would a national, uniform standard look like and why? What regulatory authority would support such a standard?

FINRA requests comment on any of its rules, guidance (i.e., Regulatory Notices, FAQs, and other FINRA published materials) or processes that affect FINRA’s arbitration forum and how they might be revised to enhance the transparency, impartiality and efficiency of FINRA’s arbitration forum for all participants.²⁷⁵ In particular, FINRA requests comment on the following questions:

M.1. Are there any other FINRA rules, guidance, operations or administrative processes that should be updated or amended that would help ensure that customers, members and their associated persons are treated fairly and support an efficient and transparent arbitration forum? If so, what has been your experience with these rules, guidance, operations or processes and what are your suggestions for improving them?

M.2. Where have FINRA rules related to arbitration been particularly effective or ineffective, and why? Are there areas where a revised approach might enhance the effectiveness and efficiency of the dispute resolution process while preserving customer protection?

M.3. What ambiguities in FINRA rules related to arbitration should FINRA address? Are there any other modifications to FINRA rules related to arbitration that should be considered to clarify their application?

M.4. Can FINRA make any of its administrative processes or interpretations related to the arbitration process more efficient and effective while protecting customers? If so, which ones and how? Are there any processes or interpretations that should be added?

M.5. Are there interdependencies among the topics identified in this Notice such that addressing certain concerns would reduce or eliminate the need to address others? For example, would enhanced arbitrator qualifications or training, or an arbitration appeals process, address concerns about punitive damages awards, explained decisions or case management efficiency? Please identify which issues you believe are most interdependent and explain how addressing one would impact the need to address the other(s).

M.6. Are there areas identified in this Notice that FINRA should prioritize when considering initial steps that may be most impactful?

M.7. Is there any additional data that FINRA could provide to help inform discussion around the issues presented in this Notice?

Conclusion

FINRA is committed to continuous improvement and has actively reviewed its regulatory requirements and processes to administer a fair and efficient arbitration forum. To this end, we request your feedback on how FINRA rules, guidance and processes should be modernized to enhance the transparency, impartiality and efficiency of FINRA’s arbitration forum for all participants. FINRA looks forward to hearing from interested parties in response to this Notice.

Endnotes