Tuesday, February 10, 2015

Securities Law: Tips For Selecting A FINRA Arbitration Panel

By Eric E. Ludin

The Financial Industry Regulatory Authority’s (FINRA) system for appointing its panels begins with providing the attorneys with a vast quantity of material about the potential arbitrators. Based on this information, the attorneys must rank the arbitrators in order of preference or strike them. This article suggests some guidelines that you can use to tackle the task of selecting your panel.

The parties’ attorneys are provided with a detailed Arbitrator Disclosure Report. The meatiest section of the disclosure report is the list of awards signed by the arbitrator. These detailed awards can be found on the FINRA.org website once you have the case number provided in the disclosure report. The awards usually include a description of the facts and issues presented in each case, the amount of the claimant’s demand, and the ultimate result. 

Being armed with this information, are you necessarily in a better position to determine whom to select? If so, what would you look for in selecting the trier of fact?

Peter King, an experienced securities defense lawyer with the Tampa firm of Wiand Guerra and King, says that he looks for lots of zero awards hoping this shows a predisposition to favor the respondents. He also looks for experienced panel members. These people, he says, have a context for the evidence they hear. They might be able to judge that the evidence, even if bad for the broker, is not necessarily egregious. 

King also likes to see lawyers on the panel, at least as the chair. He says lawyers can better control the flow of evidence. He also likes to see more than one lawyer on the panel when there are multiple legal issues to resolve. 

Claimant’s securities attorney David Anton, of the Anton Legal Group, says he normally prefers not to have lawyers on the panel. Since FINRA rules provide that the panel is not required to follow the state or federal rules of evidence, he says lawyers will be more likely to want to do so. Having the burden of proof, claimants do not want to be limited to only entering evidence that would be admitted in court. 

Anton looks for experienced panel members who have a history of favorable claimant’s awards. Most significantly, Anton likes to select arbitrators who believe in social justice. He will focus on their work history and look for attorneys from academia or arbitrators who have held social jobs such as educators. 

Securities attorneys will spend many hours reviewing the award history and biographical information about each potential arbitrator. Since the awards list the names of the attorneys involved in each case, you can contact those lawyers to learn more about their experience. 

The selection process can be the most critical phase of the arbitration. Therefore, it is worth the time and effort to drill down into the massive quantity of information to make the best decisions possible.