You may share SIFMA's concerns with FINRA's proposed amendments to the Arbitration Discovery Guide:  streamlining the Document Production Lists, from 14 down to 2, will not streamline the discovery process, but instead will lead to increasingly voluminous, burdensome, and expensive discovery and motion practice in every case.  So writes Patricia Cowert, who chairs SIFMA's Arbitration Committee, in a recent comment letter to the SEC. 

Case in Point.  The production of full sets of commission runs in every case involving “solicited trading activity” - the lion’s share of cases - serves no useful purpose.  While a more limited subset of such information may be relevant in cases containing allegations of churning, unauthorized trading or unauthorized discretionary trading, this information isn't relevant in suitability and misrepresentation cases.  Simply put, that a broker sold the same securities to unrelated clients has no bearing whatsoever on whether those securities were suitable for the claimant.  Making such information “presumptively discoverable” in all cases defeats one of the fundamental purposes of arbitration, namely, to achieve justice in a manner that's less costly, burdensome and time-consuming than a court proceeding, and will lead to unnecessary motion practice in those cases where such information is presumptively irrelevant.

In furtherance of our collective goal of improving the discovery process, Ms. Cowert offers additional comments and recommendations - which we simply list in outline form, and encourage interested persons to read by clicking onto:   [ SIFMA Comment Letter, 9/10 ]

For further details on the proposed amendments to the Discovery Guide
and Rules 12506 and 12508 of the Code, click onto:  [ FINRA Rule Filing 10-345, 7/12;  Extension #2, 10/6 ]

I.  General Comments:

1. Distinguish “customers” from “claimants.”
2. Include a reference to clearing firms in the introduction.
3. Define a reasonable time period or scope for all List items.
4. The Lists should not limit the scope of subpoenas to non-parties.
5. Maintain the privacy of non-party customer information.

II. List One:

1. Item 2 (advertising materials).
2. Item 9 (communications with compliance).
3. Items 7, 13(a) & 13(b) (distinguish customers from claimants, exception reports for non-party accounts).
4. Item 18 (third-party documents).
5. Item 19 (broker compensation).
6. Item 20 (claims re: solicited trading).
7. Item 21 (broker / firm agreements).

II. List Two:

1. General comment – affiliated accounts.
2. General comment – persons acting on behalf of the claimant.
3. Item 4 (third-party account statements).
4. Suitability information.
5. Account statements.
6. Account correspondence.
7. Account/Commission Runs.
8. Item 7 (notes).
9. Item 11 (other litigation).
10. Item 12 (business entity control / ownership).
11. Item 18 (third-party documents).
12. Item 19 (broker compensation).
13. Item 20 (claims re: solicited trading).
14. Item 21 (broker / firm agreements).