02/18/2009 03:59:31 PM EST
Securities Arbitration Becomes More User-Friendly: FINRAs Discovery Guide Updated Document Production Lists
In June 2008, after years of consideration among industry and customer representatives, FINRA filed a 60 page proposal with the SEC to update the FINRA Discovery Guide, motivated by a sincere desire to better assist all sides in getting to the truth sooner rather than later. This commentary provides a brief explanation of the categories that should be of greatest interest to practitioners and arbitrators.
Mr. Robbins writes: In the late 1990s, the NASD (now FINRA the Financial Industry Regulatory Authority) recognized a need to do something about discovery, culminating in the 1999 Discovery Guide. In 2004, it decided the Discovery Lists in the Guide needed updating. Given the complex nature of securities industry records and the storage and retrieval of data, it found that customers often failed to ask for the documents that could substantiate their allegations of wrongdoing, mostly because they did not know such documents existed. The NASD, now FINRA, also found that brokers and firms were disadvantaged by not being given access to a great number of important customer records. So it began the process of revising the Discovery Guide.
In June 2008, after years of consideration among industry and customer representatives, FINRA filed a 60 page proposal with the Securities and Exchange Commission (SEC) to update the Guide, motivated by a sincere desire to better assist all sides in getting to the truth sooner rather than later.This commentary provides a brief explanation of the categories that should be of greatest interest to practitioners and arbitrators. For the complete SEC filing and FINRAs proposed text, go to http://www.finra.org/RulesRegulation/
RuleFilings/2008RuleFilings/P038690. Here is what you need to know.
Lists #1 and #2 -- Documents Presumptively Discoverable in All Customer Cases
A. Eleven Categories of Documents Firms and Brokers Should Produce
Whats in the proposed list? Account record information (e.g., opening account agreements, new account forms); correspondence concerning the trades at issue (not including trade confirmations or monthly statements unless specifically requested); information the firm has about the customers employment and financial status; documents related to trading strategies in the customers account; the brokers notes about the customer; other complaints identified in required filings with the SEC or FINRA and complaints similar to that in the Statement of Claim; the firms compliance manuals (i.e., the entire table of contents and index and those sections related to the claims in the Statement of Claim); account analyses; account activity reviews; and, documents obtained by subpoena or by document requests of third parties. Whats new from the 1999 Guide? The prior categories are now broader.
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