Parties involved in FINRA arbitrations have wide latitude and discretion in the selection process over who will conduct the arbitration. When both sides to a financial regulation industry dispute have to submit to a FINRA arbitration hearing, there is a significant due diligence procedure in which the parties get to vet and discern the background of the eligible arbitrators who will preside over their matter.
During the application process, a list of arbitrators will be presented to the parties. Under current FINRA rules, depending on the nature of the dispute, there must be a mix of arbitrators from both public and private sources. Often times, the arbitration panels in FINRA hearings consist of decision makers coming from well-known public financial institutions, such as banks or brokerage firms, due to the need for their knowledge and expertise in the field. However, depending on the need of the hearing, the panel also may have to include arbitrators in private practice, such as lawyers, that have no connection to the financial institutions.
The procedure for selecting FINRA arbitrators also permits parties to explore, in a variety of ways, whether the potential arbitrators have conflicts of interest that should prevent them from presiding over the case. In the financial industry, there is such substantial crossover and turnover of people in the business, that parties are entitled to know if the potential arbitrators have ever been employed by or dealt with any of the financial institutions that might be relevant to the hearing. For example, if a petitioner has a grievance against Bank A and a potential arbitrator worked at Bank A for an extensive time period, then the petitioner can ask that the arbitrator be removed from the panel of candidates. This part of the process is quite extensive in that the reach of a potential arbitrator’s family and friend’s positions in the financial industry are also disclosed. This way, the parties have information to be able to root out any possible latent biases that could impact the arbitrators’ abilities to render a fair and impartial decision.
If you are considering petitioning for a FINRA arbitration hearing and want to know more about the process or need guidance in avoiding arbitration panels whose background are not well suited to best position your case, please contact the attorneys at Maya Murphy, P.C. today at (203) 221-3100.