Effective 9/27/10, FINRA will increase the number of proposed arbitrators available for review when parties choose arbitration panels from lists generated randomly by the Neutral List Selection System (NLSS).  The amendments to the Customer and Industry Codes of Arbitration Procedure (Codes) will apply to lists generated on or after the effective date.

• Currently, in a single arbitrator case, the parties receive a list of 8 chairperson arbitrators. 
  
• In a three-arbitrator case, other than a dispute involving only FINRA firms, the parties receive 3 lists - one public, one public chairperson and one non-public - each containing 8 arbitrator names.
  
• In a three-arbitrator case involving only firms, the panel consists of non-public arbitrators, so the parties receive a list of 16 arbitrators from the non-public roster and a list of 8 arbitrators from the non-public chairperson roster.

When there are no names remaining on a list because all of them have been struck by the parties, or when no mutually acceptable arbitrator is able to serve, FINRA uses NLSS to “extend the list” by randomly selecting an additional arbitrator to complete the panel.  Parties in arbitration cases have expressed concerns about extended-list appointments because they're not able to strike arbitrators from these lists - except for cause.

To address these concerns, FINRA is amending the Codes to increase the number of arbitrators on the initial lists generated by NLSS from eight to 10 (or from 16 to 20, depending on the type of case), while retaining the current limitation on strikes.

For further details, click to access:   [ FINRA RegNote 10-37, Posted 8/27 ]