Epperson & Greenidge PA Comment On Regulatory Notice 25-07
Andrew M. Greenidge, Esq.
Epperson & Greenidge PA
FINRA should change FINRA Rules 12402 and 12403 so that all Claimants and all Respondents have to share the same number of strikes when ranking arbitrators. Under the current rule so long as a brokerage firm and the financial advisor are represented by different law firms then they would get twice as many strikes as a group of investors who are represented by the same law firm. In criminal court all defendants have to share strikes for jury selection. It should be the same in FINRA arbitrations. The current system is inherently unfair to investors who often need to sue multiple brokerage firms or a brokerage firm and their financial advisor, and the bias is evident when reviewing the award history of the arbitrators who are appointed to panels where Respondents are represented by more than one law firm. Having arbitrators on a panel with an award history that clearly favors brokerage firms (i.e. there are many FINRA arbitrators who have never ruled in favor of an investor or if they do have only awarded a small fraction of the relief requested) harms investors in settlement negotiations and dramatically increases the likely of a negative award for investors. For these reasons, I request that FINRA revise Rules 12402 and 12403 to remove this inherent bias against investors during the arbitrator ranking process.
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Epperson & Greenidge PA Comment On Regulatory Notice 25-07
FINRA should change FINRA Rules 12402 and 12403 so that all Claimants and all Respondents have to share the same number of strikes when ranking arbitrators. Under the current rule so long as a brokerage firm and the financial advisor are represented by different law firms then they would get twice as many strikes as a group of investors who are represented by the same law firm. In criminal court all defendants have to share strikes for jury selection. It should be the same in FINRA arbitrations. The current system is inherently unfair to investors who often need to sue multiple brokerage firms or a brokerage firm and their financial advisor, and the bias is evident when reviewing the award history of the arbitrators who are appointed to panels where Respondents are represented by more than one law firm. Having arbitrators on a panel with an award history that clearly favors brokerage firms (i.e. there are many FINRA arbitrators who have never ruled in favor of an investor or if they do have only awarded a small fraction of the relief requested) harms investors in settlement negotiations and dramatically increases the likely of a negative award for investors. For these reasons, I request that FINRA revise Rules 12402 and 12403 to remove this inherent bias against investors during the arbitrator ranking process.