Beginning 6/6/11, chair-qualified public arbitrators will be appointed on cases involving promissory note disputes, instead of appointing chair-qualified public arbitrators who also are qualified to resolve statutory discrimination claims.  The changes apply to all promissory note proceedings in which FINRA has not yet sent lists of arbitrators to the parties, as of 6/6. 

        Background.   In 2009, FINRA implemented new procedures to expedite the administration of cases that solely involve a brokerage firm’s claim that an associated person failed to pay money owed on a promissory note.  In such cases, a single chair-qualified public arbitrator is appointed from the roster of arbitrators approved to hear statutory discrimination claims (a statutory discrimination-qualified arbitrator) to resolve the dispute.  These specially qualified arbitrators are public chair-qualified arbitrators who also are attorneys familiar with employment law and have at least 10 years of legal experience.  Further, they may not have represented primarily the views of employers or of employees within the last 5 years.  FINRA proposed using statutory discrimination qualified arbitrators because of the depth of their experience and their familiarity with employment law.

FINRA found that promissory note cases did not require such extensive experience or depth of knowledge.  In most completed cases, arbitrators decided the case on the pleadings and the respondent broker did not appear.   The number of promissory note cases also has more than doubled in the past 2 years.   As a result, it became more difficult to appoint panels in these cases using only statutory discrimination-qualified arbitrators.

Therefore, FINRA amended the Code of Arbitration Procedure for Industry Disputes (Industry Code) to provide that FINRA will appoint a chair-qualified public arbitrator to a panel resolving a promissory note dispute instead of appointing a statutory discrimination qualified arbitrator.  Chairqualified arbitrators have completed chair training and are attorneys who have served through award on at least two cases, or, if not attorneys, are arbitrators who have served through award on at least three cases.  The rule amendments ensure that FINRA has a sufficient number of qualified arbitrators readily available to resolve these matters.

        FINRA Staff Contacts.   Direct questions to:   Richard Berry, SVP, Director of Case Admin. and Regional Office Services, FINRA DR - (212) 858-4307 or richard.berry@finra.org;  Margo Hassan, Asst Chief Counsel, FINRA DR - (212) 858-4481 or margo.hassan@finra.org.

For further details, go to:   [FINRA RegNote 11-23, May 2011]