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Arbritration

About FINRA Arbitrators

FINRA
FINRA

FINRA is dedicated to investor protection and market integrity

FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. FINRA is not part of the government. It is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly.

Its independent regulation plays a critical role in America’s financial system—by enforcing high ethical standards, bringing the necessary resources and expertise to regulation and enhancing investor safeguards and market integrity—all at no cost to taxpayers.

Its mission is to safeguard the investing public against fraud and bad practices. They pursue that mission by writing and enforcing rules and regulations for every single brokerage firm and broker in the United States, and by examining broker-dealers for compliance with our own rules, federal securities laws and rules of the Municipal Securities Rulemaking Board.

All brokers must be licensed and registered by FINRA, pass their qualification exams and satisfy continuing education requirements.

It recruits, trains and manages a roster of arbitrators

FINRA recruits, trains and manages a roster of arbitrators. It selects arbitrators from a diverse cross-section of professionals. I am privileged to have been one of those selected. The arbitrators are available to arbitrate cases in over 70 hearing locations in the US, including one in Puerto Rico and one in London, UK.

It pledges to provide impartial, knowledgeable and courteous staff and highly trained arbitrators committed to delivering fair, expeditious and cost-effective dispute resolution services for investors, brokerage firms and their employees.

Finally, I, as an arbitrator am an independent contractor, not employee of FINRA.

Ken_Strongman_003smAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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Arbritration

FINRA Arbitration Motion in Limine

Motion in Limine
Motion in Limine

Arbitration has often been compared to the traditional courts.  The major difference is that the parties are able to proceed in a much more deliberate matter.  The final motion is a motion in Limine.

Motion in Limine

A motion in limine is a request for the arbitrators to rule on the admissibility of evidence in advance of the hearing. Parties may try to include other issues for ruling when filing motions in limine, including requests to dismiss one or more of the alleged claims. Arbitrators should treat any requests for dismissal of claims as motions to dismiss and respond to them in accordance with FINRA’s motion to dismiss rules. As with all motion practice, arbitrators should be alert to the possible misuse of motions as tactics to delay the hearing.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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FINRA Arbitration Motions to Compel

motions to compel discovery
motions to compel discovery

Arbitration has often been compared to the traditional courts.  The major difference is that the parties are able to proceed in a much more deliberate matter.  Although arbitration is an informal process, a variety of matters may be subject to motion practice.

Motion to Compel Discovery

FINRA Rule 12509 provides that a party may make a motion asking the panel to order another party to produce documents or information if the other party has failed to respond to discovery requests, or objects to the production of documents or information under the rules. The rules require that these motions must include the disputed document request or list item, a copy of any objection thereto and a description of the efforts of the moving party to resolve the issue before making the motion.

Before ruling on a request, arbitrators must determine that a document is relevant or likely to lead to relevant evidence. Only after determining relevancy, should the arbitrators consider the cost or burden of production. If a party has demonstrated that the cost or burden of production is disproportionate to the need for the documents, arbitrators should see whether there are alternatives that can lessen the impact, such as narrowing the relevant time frame or scope of the request, or whether the other documents can provide the same information.

For issues involving privacy or confidentiality, arbitrators may want to consider ordering the redaction (removal) of names or other information, or having the parties sign confidentiality agreements. If a party claims a document is confidential, the burden is on that party to establish its confidentiality.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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A FINRA Arbitration: bar the defenses

bar the defenses
Bar the defenses

A FINRA Arbitration provides an opportunity to bar the defenses of the defendant based upon untimely or incomplete Answers.

Motion to Bar Defenses Due to Untimely or Incomplete Answers

FINRA Rule 12308 provides that the panel may, upon motion by a party, bar a party from presenting any defenses or facts at the hearing if the party did not file a timely answer. In addition, if a party answers a claim that alleges specific facts and contentions with a general denial, or fails to include defenses or relevant facts in its answer that were known to it at the time the answer was filed, the panel may bar that party from presenting the omitted defenses or facts at the hearing.

12308. Loss of Defenses Due to Untimely or Incomplete Answer

(a) If a party does not answer within the time period specified in the Code, the panel may, upon motion, bar that party from presenting any defenses or facts at the hearing, unless the time to answer was extended in accordance with the Code. The party may also be subject to default proceedings under Rule 12801, if the conditions of Rule 12801(a) apply.
(b) If a party answers a claim that alleges specific facts and contentions with a general denial, or fails to include defenses or relevant facts in its answer that were known to it at the time the answer was filed, the panel may bar that party from presenting the omitted defenses or facts at the hearing.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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FINRA Arbitration Motions to Dismiss the case

Neutrality_Ken Strongman - Dismiss
Motions to Dismiss

A FINRA Arbitration provides several motions to dismiss.  The following are motions to dismiss before or after the case-in-chief.

FINRA Rule 12504(a) Motions to Dismiss Before a Party Concludes its Case-in-Chief

FINRA believes that parties have the right to a hearing in arbitration. Therefore, motions to dismiss filed prior to the conclusion of a party’s case-in-chief are discouraged and granted only under limited circumstances. According to FINRA Rule 12504(a), the panel cannot act upon a motion to dismiss a party or claim, unless the panel determines that:

  • the non-moving party previously released the claim(s) in dispute by a signed settlement agreement and/or written release, or
  • the moving party was not associated with the account(s), security(ies) or conduct at issue.

If a party files a motion to dismiss on multiple grounds, including eligibility, the panel must decide eligibility first, pursuant to FINRA Rule 12206. If the panel grants the motion to dismiss on eligibility, it must not rule on any other grounds for the motion.

If filing a FINRA Rule 12504(a) motion, the party must do so in writing, separately from the answer, and only after filing the answer. Such motions must be filed at least 60 days in advance of the hearing, and the other parties will have 45 days to respond. Any reply must be made within five days of receipt of a response. FINRA staff will forward motions and responses to the full panel for review. The panel should ask the parties to provide briefs if it needs additional information to decide a FINRA Rule 12504(a) motion to dismiss.

Not only do FINRA Rule 12504(a) motions require the input of the entire panel, but the panel must also hold a hearing before it grants such a motion, unless the parties waive the hearing requirement. If the panel grants the motion, the decision must be unanimous and accompanied by a written explanation. If the panel denies the motion to dismiss, a party may not re-file it, unless specifically permitted by panel order.

FINRA Rule 12504(b) Motions to Dismiss After a Party Concludes its Case-in-Chief

The restrictions set forth in FINRA Rule 12504(a) do not apply to FINRA Rule 12504(b) motions to dismiss after a party concludes its case-in-chief. After the claimant has presented its case—including all documentary evidence and testimony—but before the respondent presents its case, the respondent may ask the panel to dismiss the claim on the grounds that the claimant failed to prove the allegations in the statement of claim or failed to prove a right to recovery. Generally, these motions are made orally at the hearing after the claimant’s presentation.

When ruling on motions to dismiss after a claimant has concluded its case-in-chief, arbitrators should view the evidence in the light most favorable to the claimant. If the claimant has presented credible evidence to support a recovery, the panel should deny the motion. However, if the testimony and documents do not support any possible recovery, the panel may grant the motion to dismiss the claim.

Both sides have invested a lot of time and effort in the arbitration. Arbitrators should be sure that all parties had a full opportunity to argue the motion to dismiss.

Consider the following issues before granting a motion to dismiss:

  • Did the claimant have the chance to call all witnesses? Why or why not?
  • Did the claimant meet its burden of proof? When determining this, remember to look at all evidence presented in the light most favorable to the claimant.
  • Does the claimant have any further witnesses, evidence or testimony to offer?

The panel may direct the respondent to present its case, even if the claimant’s case is weak and the respondent’s motion has some validity.

If the panel grants a FINRA Rule 12504(b) motion and dismisses all of the claimant’s claims after the presentation of the claimant’s case, the panel must still complete the following tasks:

  • render a written award under FINRA Rule 12904; and
  • consider how to allocate forum fees and costs among the parties.

If the panel grants a FINRA Rule 12504(b) motion to dismiss on some but not all of the claimant’s claims, the hearing would proceed as to the surviving claims.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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FINRA Arbitration Eligibility Motions

Eligibility Motions
Eligibility Motions

A FINRA Arbitration provides several motions to dismiss.  A motion to dismiss based on eligibility grounds is a request made to the panel by a party.  It is made prior to or after the conclusion of the case-in-chief.  It can eliminate some or all claims raised by the party filing a claim.

FINRA Rule 12206(b) Eligibility Motions

A respondent may file a motion to dismiss a case because of eligibility under FINRA Rule 12206, which states that no claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim.

In addition to stating that the full panel will resolve any questions regarding eligibility of a claim, FINRA Rule 12206 also contains the following procedural requirements:

  • A party must file an eligibility motion in writing, separately from the answer, and only after filing the answer.
  • A party must file the motion at least 90 days before a hearing, and the other parties have 30 days to respond. Any reply must be made within five days of receipt of a response.
  • FINRA staff will forward the eligibility motion and all response papers to the full panel for review.
  • If a party files a motion to dismiss on multiple grounds, including eligibility, the panel must decide eligibility first.
  • Before granting a motion under this rule, the panel must hold a hearing on the record.
  • If the panel grants an eligibility motion, the decision must be unanimous, and must be accompanied by a written explanation.
  • If the panel determines that a claim was filed after the six-year eligibility cut-off and grants the eligibility motion, it cannot rule on any other grounds for dismissal.

The panel determines whether a claim meets the six-year eligibility requirement by reviewing the submissions, pleadings and arguments of the parties. When appropriate, the panel may give the parties a reasonable opportunity to conduct discovery. As with any discovery request, arbitrators have discretion to grant, deny or modify the request. If the arbitrators have additional questions about the eligibility of the claim, they should ask the parties to brief the issue. The arbitrators may find that there is a continuing occurrence or event giving rise to the dispute. For example, although a customer purchased stock 10 years ago, there are allegations of ongoing fraud starting with the purchase, but continuing to a date within six years of the date the claim was filed.

If the panel dismisses a claim on the grounds of eligibility, the non-moving party may withdraw any remaining related claims without prejudice and may pursue all claims, including the dismissed claim, in court. Before dismissing a claim, however, the arbitrators should carefully consider each party’s positions in their moving, response and reply papers and oral arguments, and must hold a hearing on the record. If the panel reaches a unanimous decision to grant the eligibility motion, it should inform FINRA of its ruling promptly and provide a written decision.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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FINRA Arbitration motions: Hearing Timing & Location

Hearing location and timing
Hearing location and timing

Examples of FINRA Arbitration motions that can be made regarding timing and location.

The following motions can be made within a FINRA Arbitration.  These particular motions involve modifying the original claim.  The following concern the location of the hearing and its timing.  As an Arbitrator, I will be mindful that one of the goals of arbitration is to provide a speedy method for resolving disputes. Our role is to bring the parties’ disputes to a fair and expeditious conclusion.

Motion to Change the Hearing Location

In accordance with FINRA Rule 12213, FINRA will generally select the hearing location closest to the customer’s residence at the time of the events giving rise to the dispute, unless the hearing location closest to the customer’s residence is in a different state. In that case, the customer may request a hearing location in the state where the customer resided at the time of the events giving rise to the dispute, even though it may be further from the nearest out-of-state hearing location.

In cases involving firms only, or more than one associated person, under FINRA Rule 13213 FINRA will consider several factors when selecting the hearing location, including:

  • the parties’ signed agreement to arbitrate, if any;
  • which party initiated the transaction or business in issue; and
  • The location of essential witnesses and documents.

Motion to Postpone a Hearing

FINRA Rule 12601 provides that arbitrators may postpone any hearing(s) either on their own initiative or at the request of any party to the arbitration. A party may request that the arbitrators postpone a hearing for a variety of reasons, such as the sudden inability of a necessary party, counsel or material witness to appear.

Consensual Postponement

A hearing will be automatically postponed if all parties agree to postpone the hearing. However, if all parties jointly request or agree to more than two postponements, the panel may dismiss the arbitration without prejudice.

Contested Motion to Postpone

When parties request a postponement without the agreement of all parties, the panel may not grant a postponement request made within 10 days of a scheduled hearing session, unless the panel determines that good cause exists. In deciding whether to grant a contested postponement request, the arbitrators should consider the following factors:

  • fairness to the parties;
  • the objection of the opposing party;
  • the merits of the request;
  • previous postponements; and
  • the ability to conduct a productive hearing.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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FINRA Arbitration motions: Sever, Consolidate, & Amend

Prehearing Conference

FINRA Arbitration motions: Sever, Consolidate, & Amend

The following motions can be made within a FINRA Arbitration.  These particular motions involve modifying the original claim.

Motion to Amend a Claim

FINRA Rule 12309 provides that parties may amend their pleadings, including adjustments to their damage requests, up until the time FINRA staff appoints a panel. Once a panel is appointed, parties may only amend their pleadings if the panel grants a motion to amend the pleading. However, once the ranked arbitrator lists are due to FINRA, no party may amend a pleading to add a new party to the arbitration until a panel has been appointed and the panel grants a motion to add the party.

Motion to Consolidate Claims

FINRA Rule 12312 provides that one or more claimants may join multiple claims together in the same arbitration if the claims contain common questions of law or fact and:

  • the claims assert any right to relief jointly and severally; or
  • the claims arise out of the same transaction or occurrence, or series of transactions or occurrences.

FINRA Rule 12313 provides that one or more parties may name one or more respondents in the same arbitration if the claims contain any questions of law or fact common to all respondents and:

  • the claims are asserted against the respondents jointly and severally; or
  • the claims arise out of the same transaction or occurrence, or series of transactions or occurrences.

Before the panel’s appointment, FINRA staff may consider a party’s motion to consolidate claims. After its appointment, the Arbitration panel may reconsider the decision to consolidate the claims based on a party’s motion.

Motion to Sever Claims

Under FINRA Rules 12312 and 12313, parties may request that a claim be heard separately from another claim. Arbitrators will refer to the FINRA standards to Consolidate Claims before determining whether the claims can be appropriately consolidated.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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Arbritration

Examples of FINRA Arbitration motions

There needs to be an absolute appearance of being impartial. motions
FINRA Arbitration Motions

Examples of FINRA Arbitration motions

Arbitration has often been compared to the traditional courts.  The major difference is that the parties are able to proceed in a much more deliberate matter.  Although arbitration is an informal process, a variety of matters may be subject to motion practice.  The following is a non-exhaustive list of common motions that can be filed in FINRA arbitration.  I will describe them more fully in subsequent postings.

  • Motion to Amend a Claim
  • Motion to Consolidate Claims
  • Motion to Sever Claims
  • Motion to Change the Hearing Location
  • Motion to Bar Defenses Due to Untimely or Incomplete Answers
  • Motion to Compel Discovery
  • Motion to Postpone a Hearing
  • Motion to Dismiss
  • Motion in Limine

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.

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Arbritration

Discovery Sanctions within FINRA Arbitration

sanctions
Sanctions

Discovery Sanctions within FINRA Arbitration

Failure to comply with the discovery rules hinders the efficient and cost-effective resolution of disputes and undermines the integrity and fairness of FINRA’s forum. Parties sometimes attempt to use the discovery process to harass and burden their opponent. Arbitrators will take this into consideration when considering discovery issues.

Arbitrators have several tools available for addressing failures to comply with FINRA discovery rules. FINRA Rules provide for sanctions when a party’s failure to cooperate in the exchange of documents and information. The panel may issue sanctions against any party for failing to comply with the discovery provisions of the rules, unless the panel determines that there is substantial justification for the failure to comply; or frivolously objecting to the production of requested documents or information.

More over FINRA Rules allows the panel may dismiss a claim, defense or arbitration with prejudice as a sanction for the material and intentional failure to comply with an order of the panel if prior warnings or sanctions have proven ineffective.

Ken Strongman, MediatorAbout the Author: Ken Strongman (www.kpstrongman.com) has years of experience and a growing national reputation as a mediator and arbitrator.  He has successfully resolved more than a thousand disputes in the fields of construction defects, real estate, intellectual property, and employment.  He is also a Mediator and Arbitrator for FINRA.

© 2020 Ken Strongman. All Rights Reserved. Please do not copy or repost without permission.