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Securities Arbitration 2017 Seminar Offers a Bevy of Tips for FINRA Arbitration Practitioners
Posted on Categories Arbitrators, FINRA Task Force, News, Securities Arbitration, SeminarTags , , , , , ,

The seminar, held at the Practising Law Institute in Manhattan on Wednesday, Sept. 27, from 9 a.m. to 5 p.m., included six segments, each featuring a lively discussion by a five-person panel including representatives of FINRA, arbitrators and customer and industry counsel.

The seminar, hosted by Sandra D. Grannum, Esq., Drinker Biddle & Reath, included a wealth of tips on a variety of subjects.

It opened with a segment on FINRA developments, fittingly moderated by Rick Berry, Executive Director of FINRA-DR, and concluded with a forward-looking discussion of “Hot Topics and Future Trends in 2018” at FINRA, moderated by Ms. Grannum. Sandwiched in between were four segments addressing certain subjects in more detail: (1) the ethical, practical and legal consideration for litigating pro se parties, moderated by Harry Walters, Managing Director at Morgan Stanley Wealth Management; (2) expungement hearings, again moderated by Ms. Grannum; (3) legal ethics in financial fraud cases involving seniors, moderated by Teresa Verges, Director of the Investor Rights Clinic at University of Miami Law School; and (4) variable annuities cases and the role of insurance for broker-dealers, moderated by Ken Andrichik, Senior Vice President at FINRA.

FINRA News and Outlook

Here are some of the notable current developments at FINRA and things to look out for in the near future:

  • The National Arbitration and Mediation Committee has considered all 51 recommendations of the Dispute Resolution Task Force and has taken action on 39. The 12 remaining include nine dealing with mediation and expungement.
  • Arbitrator recruitment has been “tremendous” and efforts to increase the pool's diversity have brought noticeable results.
  • FINRA will request comment on a number of measures to address unpaid Awards.
  • Several rule initiatives are in the works, including new restrictions on expungement and the implementation of a streamlined hearing option in simplified cases, while a proposal to submit discovery issues to specialized arbitrators is being scrapped.
  • FINRA will ask for suggestions on making hearing rooms more technologically advanced and could require arbitrators to use its online Portal for most actions.

Tips and Comments on Pro Se Parties, Expungement, Seniors and Insurance

Here are some sample take aways from the four topical segments:

  • Pro se litigants are difficult to deal with, because they understand little about the arbitration process, and arbitrators tend to treat them more gingerly than represented parties for that reason; settlement negotiations, which pro ses tend to make difficult, are best handled through mediation.
  • Seeking expungement of a customer claim in the embedded proceeding is more cost effective for brokers than an independent proceeding, but doing so when the claimant is sympathetic may anger the arbitrators and, in any case, the odds of success are lower.
  • When a senior investor is victimized, the broker becomes the first line of defense in surfacing a crisis; the appointment of a guardian ad litem and the use of interpleader proceedings to obtain court guidance are useful options.
  • Claimants’ counsel should make sure their Statements of Claim include insurable claims.

(ed: *We commend everyone involved on the informative and interesting program. ** **Mr. Andrichik, speaking from the audience, suggested directing pro se litigants to FINRA’s online resources on “What to Expect” as a means of educating them about the FINRA arbitration process. ***One may still purchase a video of the program for $480 on PLI’s website, at this link.) (SAC Ref. No. 2017-38-03)

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