This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.
The FINRA Board met earlier this month and approved rule changes codifying the voluntary program accelerating case processing for elderly or seriously ill parties. As reported in SAA 2024-10 (Mar. 7), the FINRA Board of Governors met in person March 6–7. The Agenda listed a dispute resolution action item: “The Regulatory Policy Committee will review a proposed rule change to the Codes of Arbitration Procedure to accelerate case processing for elderly or seriously ill parties.”
A Brief History
As reported in SAA 2021-46 (Dec. 9), FINRA’s Board of Governors met in December 2021 and among other actions approved a rule change proposal to codify and improve the existing FINRA Dispute Resolution Services special program to expedite administration of arbitration cases involving senior or seriously ill parties. FINRA CEO Robert W. Cook’s post-meeting memo stated: “The Board approved publication of a Regulatory Notice soliciting comment on proposed amendments to the Codes of Arbitration Procedure to accelerate case processing for seriously ill parties and parties who are 75 or older.” In keeping with the “new normal” for rule change proposals, the Board had authorized staff to publish a Regulatory Notice seeking comments, rather than a 19b filing with the SEC. In March 2022 FINRA published Regulatory Notice 22-09, FINRA Requests Comment on a Proposed Rule to Accelerate Arbitration Proceedings for Seriously Ill or Elderly Parties:
“FINRA seeks comment on a proposal to accelerate arbitration case processing when requested by parties who are seriously ill or are at least 75 years old. The proposal would help ensure that these parties are able to participate meaningfully in FINRA arbitration by shortening certain case processing deadlines for parties and arbitrators under the Codes.”
Originally a Voluntary Program
The thrust of the proposal was to codify the existing voluntary program via which parties could agree to accelerate impacted cases. Under these proceedings, which have been in effect since 2004 (ed: repeated verbatim):
FINRA Dispute Resolution staff (staff) will endeavor to do the following on an expedited basis:
• Complete the arbitrator selection process;
• Schedule the initial pre-hearing conference;
• Serve the final award; and
• Determine whether the parties are interested in mediation.
Arbitrators are encouraged to consider the health and age of a party when:
• Scheduling hearing dates;
• Considering postponement requests; and
• Setting discovery deadlines.
Comments
The proposal garnered 15 comments, which we analyzed in SAA 2022-21 (Jun. 2). The comment letters – including those from PIABA, NASAA, and SIFMA – were almost all supportive, but with most suggesting further improvements. Our editorial comment in no. 2022-21 was: “What’s next? Most likely staff will return to the National Arbitration & Mediation Committee or the Board with changes resulting from the comments received.” It seems we are at that juncture.
Board Authorizes Rule Filing
FINRA posted on its Website these results from the recent Board meeting:
“The Board approved one rule proposal: modifications to proposed amendments to the Codes of Arbitration Procedure previously approved by the Board to accelerate case processing for elderly or seriously ill parties. These modifications were in response to feedback we received on a Request for Comment on the previous proposal, which would lower the age at which parties would qualify for accelerated processing. The proposal will require SEC approval before going into effect.”
(ed: *We’ll have to await the rule filing to see the changes made in response to the comments. **As we’ve said before, this is a welcome change since, when all is said and done, the existing voluntary program does not abrogate the time frames in the Codes. ***The rest of the 2024 FINRA Board schedule is: May 8–9; July 24–25; September 18–19; and December 4–5.)
