12800. Simplified Arbitration
(a) Applicability of Rule
This rule applies to arbitrations involving $50,000 or less, exclusive of interest and expenses. All arbitrations administered under this rule will be decided on the pleadings and other materials submitted by the parties unless the customer requests a hearing under paragraph (c) of this rule. Except as otherwise provided in this rule, all provisions of the Code apply to such arbitrations.
(b) Single Arbitrator
All arbitrations administered under this rule will be decided by a single public arbitrator appointed from the FINRA chairperson roster in accordance with the Neutral List Selection System, unless the parties agree in writing otherwise.
(1) No hearing will be held in arbitrations administered under this rule unless the customer requests a hearing.
(2) If no hearing is requested, no initial prehearing conference or other prehearing conference will be held, and the arbitrator will render an award based on the pleadings and other materials submitted by the parties.
(3) If the customer requests a hearing, the customer must select between one of two hearing options under this rule.
(A) Option One — the regular provisions of the Code relating to prehearings and hearings, including all fee provisions.
(B) Option Two — a special proceeding, subject to the regular provisions of the Code relating to prehearings and hearings, including all fee provisions, except as modified by subparagraphs (i) through (viii) of this paragraph:
(i) a special proceeding will be held by telephone unless the parties agree to another method of appearance;
(ii) the claimants, collectively, are limited to two hours to present their case and ½ hour for any rebuttal and closing statement, exclusive of questions from the arbitrator and responses to such questions;
(iii) the respondents, collectively, are limited to two hours to present their case and ½ hour for any rebuttal and closing statement, exclusive of questions from the arbitrator and responses to such questions;
(iv) notwithstanding subparagraphs (ii) and (iii) above, the arbitrator has the discretion to cede his or her allotted time to the parties;
(v) in no event shall a special proceeding exceed two hearing sessions, exclusive of prehearing conferences, to be completed in one day;
(vi) the parties may not question the opposing parties' witnesses;
(vii) a customer may not call an opposing party, a current or former associated person of a member party or a current or former employee of a member party as a witness; and
(viii) members and associated persons may not call a customer of a member party as a witness.
(d) Discovery and Additional Evidence
(1) Document Production Lists, described in Rule 12506, do not apply to arbitrations subject to this rule. However, the arbitrator may, in his or her discretion, choose to use relevant portions of the Document Production Lists in a manner consistent with the expedited nature of simplified proceedings.
(2) The parties may request documents and other information from each other. All requests for the production of documents and other information must be served on all other parties, and filed with the Director, within 30 days from the date that the last answer is due. Any response or objection to a discovery request must be served on all other parties and filed with the Director within 10 days of the receipt of the requests. The parties receiving the request must produce the requested documents or information to all other parties by serving the requested documents or information by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Parties must not file the documents with the Director. The arbitrator will resolve any discovery disputes.
(e) Increases in Amount in Dispute
If any pleading increases the amount in dispute to more than $50,000, the arbitration will no longer be administered under this rule, and the regular provisions of the Code will apply. If an arbitrator has been appointed, that arbitrator will remain on the panel. If a three-arbitrator panel is required or requested under Rule 12401, the remaining arbitrators will be appointed by the Director in accordance with Rule 12403. If no arbitrator has been appointed, the entire panel will be appointed in accordance with the Neutral List Selection System.
(f) Arbitrator Honoraria
FINRA will pay the arbitrator an honorarium of $350 for each arbitration decided on the pleadings and other materials submitted by the parties. In cases where the customer requests a hearing, the regular provisions of the Code relating to arbitrator honoraria will apply.
Amended by SR-FINRA-2018-003 eff. Sept. 17, 2018.
Amended by SR-FINRA-2016-029 eff. April 3, 2017.
Amended by SR-FINRA-2014-026 eff. Dec. 15, 2014.
Amended by SR-FINRA-2013-023 eff. Sep. 30, 2013.
Amended by SR-FINRA-2012-012 eff. July 23, 2012.
Amended by SR-FINRA-2011-007 eff. Feb. 16, 2011.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Adopted by SR-NASD-2003-158 eff. April 16, 2007.
Selected Notices: 07-07, 08-57, 12-30, 13-30, 14-49, 17-03, 18-21.
- Regulatory Notice 18-21July 23, 2018
- Regulatory Notice 14-49November 14, 2014
- Regulatory Notice 14-27June 30, 2014
- Regulatory Notice 12-30June 22, 2012
- Regulatory Notice 08-79December 15, 2008