Sutherland Alert: FINRA’s All Public Panel Option Is Now Available in All Customer Cases

by Bryan Ward

The Securities and Exchange Commission recently approved a rule change that allows claimants to choose an arbitration panel made up entirely of public arbitrators. This change is applicable to all current customer cases in which FINRA has not sent a list of arbitrators by the rule's effective date of February 1, 2011.

Background

Investor advocates have long attacked the arbitration process as being unfair to customers, particularly because an industry arbitrator is included on each three-person panel. In response to these criticisms, FINRA enacted a trial program called the Public Arbitrator Pilot Program (PAPP), which allowed broker-dealers to opt-in to a process that gave claimants a choice between the traditional majority public panel or an all public panel. Nearly 60% of claimants chose the all public panel option in these PAPP cases. The new rule expands the procedures implemented in PAPP to all cases involving customers.

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