SEC Approves Amendments Expanding FINRA Arbitrators Authority to Make Referrals During Arbitration Proceedings

In Regulatory Notice 14-42 (“RN 14-42”), FINRA announced amendments to the FINRA Customer and Industry Codes increasing an arbitrator’s authority to make referrals to FINRA enforcement during the course of an arbitration hearing.  Previously, the referral protocol limited the ability of a FINRA arbitrator to make referrals until the conclusion of a matter. Post-matter referrals are still allowed and encouraged…

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FINRA CAUTIONS FIRMS IN ITS REGULATORY NOTICE 14-40 THAT CONFIDENTIALITY PROVISIONS IN SETTLEMENT AGREEMENTS AND IN THE ARBITRATION DISCOVERY PROCESS MAY LEAD TO VIOLATIONS OF FINRA RULE 2010

In Regulatory Notice 14-40 (“RN 14-40”), released last week, FINRA cautioned firms on confidentiality or settlement agreements that prohibit or restrict a party from communicating or providing documents to FINRA or other securities regulators.  FINRA warned that such provisions would violate FINRA Rule 2010 (just and equitable principles of trade), and could subject firms to FINRA disciplinary action. While FINRA…

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FINRA Defends Arbitrator Pool Amidst Criticism From New PIABA Study

On October 7, 2014, the Public Investors Arbitration Bar Association (“PIABA”) released a report that condemns FINRA for the “lack of diversity” and “transparency” found within its arbitrator pool. The PIABA report, based on an analysis of 5,375 FINRA arbitrators, identifies concerns involving: (1) arbitrators average age - according to the report, the average age of a FINRA arbitrator is…

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FINRA’S ACCOUNT REPORTING SYSTEM (“CARDS”) MOVES FROM CONCEPT PROPOSAL STAGE TO RULE PROPOSAL

In Regulatory Notice 14-37, FINRA requested comment on a rule proposal to implement the Consolidated Automated Risk Data System (“CARDS”). The system would collect account information (excluding personally identifiable information), initially, from carrying and clearing firms, and subsequently, from introducing firms, in an automated format. The information to be submitted would include data relating to securities and account transactions, holdings,…

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