FINRA Stats, 1/19: The New Year at FINRA-DR Begins with Some Puzzling Twists
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There are some big differences between the way 2018 began at FINRA-ODR and the trends revealed in the recently posted January 2019 statistics.

Our lead when the December 2018 statistics were reported by FINRA’s Office of Dispute Resolution (SAA 2019-04 (Jan. 23)) exclaimed that “December Pops,” as the monthly case filings tally closed the year with a higher-than-average 388 new submissions. Industry claims were rising as a percentage of the newly docketed cases, but customer claims still predominated at 62% of the whole. In January, by contrast, industry and customer claims were fairly close to one-half each (48% v. 52%, respectively) and the total showing was 336 (160 & 176) new claims. Last year, in January, the number of new industry claims filed was 145, while the number of new customer claims totaled 239. That reflects a 26% drop-off in customer claims, year-to-year.

Closed Cases and ATT Stand Out

January 2019 was an especially busy month for close-outs. We at SAC have witnessed that rise in the strong stream of Awards that feed our Award-reporting periodical, the UPDATE: ARBchek (the UA). Almost each weekly batch contained about 35-40 Awards the first month. It’s tapered down a bit in February. For January, FINRA reported 402 cases concluded, up 22% from same-period 2018. Despite that early surge, open or pending cases at FINRA stand at a three-year high (4,982). The stand-out in this month's leading statistics: average turnaround time. Overall, ATT has dropped 15% year-to-year to a remarkable 12.9 months (when's the last time FINRA was there?) We were ready to attribute that time savings to the heavy flow of single-issue expungement Awards, except that the ATT for Hearing Decisions rose 9% year-to-year!

Super ATT, but Why? How?

We have to believe a flock (or block) of early settlements explains the drop. Supporting that explanation is another stand-out figure in FINRA’s “How Arbitration Cases Closed” Chart: Direct Settlements. This category has historically accounted for 50-54% of close-outs, but, in January, Direct Settlements jumped to 61% (240/402) of the month’s concluded matters! This result fortifies the notion that a sizeable group of similar disputes, probably involving the same brokerage firm(s), came to a resolution and were reported as settled in time for inclusion in January’s statistics. We just can’t think what group that would be, but perhaps one of our readers will help us “remember.”

Surprising Statistics; Fake News

While we're on the subject of outlying and surprise statistics, picture these headlines! “Investors win 67% of their Cases before Public Arbitrators; Panels with Industry Arbitrators Award Nothing!” For the month of February that would be true -- a fluke, really, and it shows the danger of relying on small samples to generalize. The opening months of the year are perilous for us, while we await more representative samples, so we’ll eschew further analysis this month of Award results. Going back to FINRA’s three-member panel Chart of All-Public and Majority Public Panels, we see that in February, sure enough, 9 cases were decided by APPs, with 6 customer “wins,” and 5 cases were decided by MPPs, with 0 customer wins! (ed: Recall that 2018 closed with APP-MPP “win” percentages of 42% and 47%, respectively.)

Neutral Roster Continues Growth

We’ll end with our usual look at the Arbitrators by Type Chart. FINRA-DR appears to be aggressively continuing its recruiting efforts. The Neutral Roster grew in one month by 39 arbitrators -- that's a net of 17 Public Arbitrators (3,490 in December 3,507 in January) and 22 Non-Public Arbitrators (4,240 vs. 4,262). There are now 7,769 Arbitrators ready to hear your cases at FINRA!

(ed: One month hardly constitutes a trend, so let’s see where we stand after a few months. Still, the nearly equal customer and industry case flings is certainly worthy of attention.) (SAC Ref. No. 2019-10-02)

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