FINRA—simplified arbitration proceedings and injunctive relief under the Customer Code and the Industry Code
FINRA—simplified arbitration proceedings and injunctive relief under the Customer Code and the Industry Code

The following Arbitration guidance note provides comprehensive and up to date legal information covering:

  • FINRA—simplified arbitration proceedings and injunctive relief under the Customer Code and the Industry Code
  • Investor disputes
  • Industry disputes

The Financial Industry Regulatory Authority (FINRA) is an independent regulatory body overseeing the US securities industry. As part of its role, FINRA operates the largest dispute resolution body in the securities industry. It works to resolve monetary and business disputes between investors, brokerage firms and individual brokers, as well as disputes between and among brokerage firms and individual brokers.

The disputes are dealt with using FINRA’s own arbitration procedure. FINRA has two Codes of Arbitration Procedure:

  1. the Code of Arbitration Procedure for Customer Disputes (the Customer Code or Section 12000 of the FINRA Rules)—which governs arbitration proceedings between investors and industry parties, and

  2. the Code of Arbitration Procedure for Industry Disputes (the Industry Code or Section 13000 of the FINRA Rules)—which governs arbitration proceedings between industry parties

This note concerns both Codes.

Investor disputes

Simplified arbitration proceedings

Investor arbitrations involving claims of $50,000 or less, exclusive of interest and expenses, will be administered under the simplified arbitration rules (the Customer Code, Pt VIII, r 12800). Simplified arbitration proceedings are determined by a single public arbitrator appointed from FINRA's chairperson roster of in accordance with the Neutral List Selection System (NLSS), unless the parties agree in writing otherwise.

A hearing will not be held unless the investor party requests one. Where no hearing is held, there will be no pre-hearing conferences and an award