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FINRA Manual
Corporate Organization Notices
2012
12-58 SEC No-Action Guidance Expanding the Definition of "Ready Market" for Certain Foreign Equity Securities
12-57 SEC Approves Amendments to FINRA Dispute Resolution, Inc. By-Laws to Classify Mediators as Public Members if They Are Not Otherwise Disqualified From Being Classified as Public Members; Effective Date: January 22, 2013
12-56 SEC Approves Amendments to TRACE Rules and Dissemination Protocols to Disseminate Specified Pool Transactions and SBA-Backed ABS Transactions and to Reduce the Time to Report Such Transactions; Effective Date: July 22, 2013
12-54 Reporting Relief Relating to Customer and PAIB Reserve Formula Computations and Required Deposits Around the December 2012 Month-End Holidays
12-53 FINRA Waives Certain Trade Reporting and Compliance Engine (TRACE) Late Trade Reporting Fees in Connection With Hurricane Sandy
12-51 FINRA Changes the Effective Date of the Minimum Quotation Size Pilot for OTC Equity Securities in FINRA Rule 6433 From November 5, 2012, to November 12, 2012; Revised Effective Date: November 12, 2012
12-49 SEC Approves Amendments to NASD Rule 2711 and Incorporated NYSE Rule 472 to Conform to JOBS Act Requirements; Effective Dates: April 5, 2012, and October 11, 2012
12-48 FINRA Changes the Effective Date for Amendments to TRACE Rules Relating to the Reporting and Dissemination of Agency Pass-Through Mortgage-Backed Securities Traded To Be Announced and Related TRACE Fees in FINRA Rule 7730 from November 5, 2012, to November 12, 2012
12-47 FINRA and ISG Extend Effective Date for Certain Electronic Blue Sheet Data Elements; Effective Date: May 1, 2013
12-46 Broker-Dealer, Investment Adviser Firm, Agent and Investment Adviser Representative, and Branch Renewals for 2013; Payment Deadline: December 13, 2012
12-44 SEC Approves Amendments to FINRA Rule 4210 (Margin Requirements); Effective Dates: October 26, 2012, and January 23, 2013
12-43 Securities Industry/Regulatory Council on Continuing Education Issues Firm Element Advisory Update
12-42 FINRA Requests Comment on a Revised Proposal to Identify and Manage Conflicts Involving the Preparation and Distribution of Debt Research Reports; Comment Period Expires: December 20, 2012
12-41 FINRA Amends the TAF Rate for Transactions in Covered Security Futures; Effective Date: October 1, 2012
12-40 SEC Approves New FINRA Rule 5123 Regarding Private Placements of Securities; Effective Date: December 3, 2012
12-39 FINRA Requests Comment on TRACE Dissemination Issues; Comment Period Expires: November 19, 2012
12-38 SEC Approves Amendments to FINRA's Short-Interest Reporting Rule; Effective Date: November 30, 2012
12-37 SEC Approves Amended Minimum Quotation Sizes for OTC Equity Securities on a Pilot Basis; Effective Date: November 5, 2012
12-36 FINRA and ISG Delay Effective Date for Enhanced Electronic Blue Sheet Submissions; Effective Dates: November 30, 2012, and May 1, 2013
12-35 Amendments to Mediation Code to Provide the Mediation Director With Discretion to Determine Whether Parties to a FINRA Mediation May Select a Mediator Who Is Not on FINRA's Mediator Roster; Effective Date: August 6, 2012
12-34 FINRA Requests Comment on Proposed Regulation of Crowdfunding Activities; Comment Period Expires: August 31, 2012
12-33 FINRA Amends Electronic Form NMA and Adopts New Electronic Form CMA Filing Requirements; Implementation Date: July 23, 2012
12-32 Changes to Advertising, Corporate Financing, New Membership and Continuing Membership Application, Central Registration Depository and Branch Office Annual Registration Fees
12-31 SEC Approves Increase in the TAF Rate for Sales of Covered Equity Securities; Effective Date: July 1, 2012
12-30 SEC Approves Amendments to Arbitration Codes to Raise the Limit for Simplified Arbitration from $25,000 to $50,000; Effective Date: July 23, 2012
12-29 SEC Approves New Rules Governing Communications With the Public; Effective Date: February 4, 2013
12-28 SEC Approves Amendments to Rule 13204 of the Industry Code to Preclude Collective Action Claims from Being Arbitrated Under the Code; Effective Date: July 9, 2012
12-27 FINRA Requests Comment on Proposed Amendments to FINRA Rule 5110 Regarding Deferred Compensation Arrangements in Public Offerings; Comment Period Expires: July 23, 2012
12-26 SEC Approves Amendments to TRACE Reporting Requirements and Dissemination of Agency Pass-Through Mortgage-Backed Securities Traded To Be Announced and Related Fees; Effective Date: November 5, 2012
12-24 FINRA Reminds Firms of Rule 5131(d)(4)'s Prohibition on Accepting Market Orders for the Purchase of New Issues Prior to the Commencement of Trading on the Secondary Market
12-23 FINRA Requests Comment on Proposed Supplementary Schedule for Derivatives and Other Off-Balance Sheet Items; Comment Period Expires: June 4, 2012
12-21 SEC Approves Amendments to Align FINRA Rules With Statutes That Invalidate Predispute Arbitration Agreements for Whistleblower Disputes; Effective Date: May 21, 2012
12-20 Securities Industry/Regulatory Council on Continuing Education Issues Firm Element Advisory Update
12-19 FINRA Announces New Electronic Process for Submission of Notice and Information Relating to Distributions Subject to SEC Regulation M; Effective Date: June 4, 2012
12-18 FINRA Requests Comment on Proposed New In re Expungement Procedures for Persons Not Named in a Customer-Initiated Arbitration; Comment Period Expires: May 21, 2012
12-16 Changes to Qualification Examination Fees and New Service Charge for Regulatory Element Continuing Education Sessions Taken Outside the United States; Effective Date: April 2, 2012
12-15 SEC Approves Rule to Establish an Accounting Support Fee to Fund the Governmental Accounting Standards Board; Effective Date: February 23, 2012
12-14 FINRA Requests Comment on Proposed Amendments to NASD Rule 2340 to Address Values of Unlisted Direct Participation Programs and Real Estate Investment Trusts; Comment Period Expires: April 11, 2012
12-11 SEC Approves New FINRA Rule 4524 Requiring the Filing of Supplemental FOCUS Information and a Supplementary Schedule to the Statement of Income (Loss) Page of the FOCUS Report
12-10 FINRA Requests Comment on Ways to Facilitate and Increase Investor Use of BrokerCheck Information; Comment Period Expires: April 27, 2012
12-09 FINRA Requests Comment on a Proposal to Identify and Manage Conflicts Involving the Preparation and Distribution of Debt Research Reports; Comment Period Expires: April 2, 2012
12-08 SEC Requests Broker-Dealers Make SARs and SAR Information Available to FINRA; Effective Date: January 26, 2012
12-07 FINRA Requests Comment on Proposed Amendments Relating to Reporting of OTC Trades Executed in a Mixed Capacity; Comment Period Expires March 26, 2012
12-06 SEC Approves Increase in the TAF Rate for Sales of Covered Equity Securities; Effective Date: March 1, 2012
12-04 SEC Approves Amendments to FINRA Rule 0160 (Definitions) and the Repeal of Incorporated NYSE Rule 2A (Jurisdiction); Effective Date: February 21, 2012
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12-30 SEC Approves Amendments to Arbitration Codes to Raise the Limit for Simplified Arbitration from $25,000 to $50,000; Effective Date: July 23, 2012
Simplified Arbitration
| Regulatory Notice | |
|
Notice Type Rule Amendment |
Suggested Routing Compliance Legal Registered Representatives |
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Key Topics Arbitration Code of Arbitration Procedure Simplified Arbitration |
Referenced Rules & Notices FINRA Rule 12401 FINRA Rule 12800 FINRA Rule 13401 FINRA Rule 13800 |
Executive Summary
FINRA Rules 12800 and 13800 (Simplified Arbitration) of the Customer and Industry Codes of Arbitration Procedure (Codes) provide streamlined arbitration procedures for claimants seeking damages of $25,000 or less. The SEC approved amendments to the Codes to raise the dollar limit for simplified arbitration from $25,000 to $50,000.1
The amendments are effective on July 23, 2012, for all cases filed on or after the effective date.
The text of the amendments is set forth in Attachment A.
Questions concerning this Notice should be directed to:
Background & Discussion
Currently, FINRA offers streamlined arbitration procedures for claimants seeking damages of $25,000 or less. Under Rules 12800 and 13800 (simplified arbitration rules), unless a party requests a hearing, a single arbitrator resolves the dispute and issues an award based on the written submissions of the parties. In a customer case, only the customer has the option to request a hearing (an industry party may not request a hearing). In an industry case, only the claimant (whether a firm or an individual) has the option to request a hearing (other parties may not request a hearing). FINRA also streamlines discovery for cases administered under these rules.
The SEC approved amendments to the Codes to raise the limit for claims eligible under the simplified arbitration rules from $25,000 to $50,000. However, if any pleading (such as a counterclaim) increases the amount in dispute to more than $50,000, FINRA would no longer administer the claim under the simplified arbitration rules. FINRA also made conforming amendments to Rules 12401 and 13401 (Number of Arbitrators) to reflect that FINRA will administer claims up to $50,000 under the simplified arbitration rules.
The higher limit under the simplified arbitration rules benefits forum users in a number of ways. First, parties benefit from reduced forum fees because they can avoid hearing session fees and hearing process fees. Second, parties save the time and expense of preparing for, scheduling and traveling to a hearing when an arbitrator decides a case on the pleadings. Third, customers who are unable to retain an attorney, or are uncomfortable appearing at a hearing without representation, now have the option of having their claims decided on their written submissions. Fourth, FINRA can expedite administration of cases under the simplified arbitration rules because the arbitrator and the parties do not need to schedule a hearing.
The amendments are effective for all cases filed on or after July 23, 2012.
1. See Securities Exchange Act Rel. No. 66913 (May 3, 2012), 77 Federal Register 27262 (May 9, 2012) (File No. SR-FINRA-2012-012).
ATTACHMENT A
New language is underlined; deletions are in brackets
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Customer Code
12401. Number of Arbitrators
If the amount of a claim is [$25,000] $50,000 or less, exclusive of interest and expenses, the panel will consist of one arbitrator and the claim is subject to the simplified arbitration procedures under Rule 12800.
If the amount of a claim is more than [$25,000] $50,000 but not more than $100,000, exclusive of interest and expenses, the panel will consist of one arbitrator unless the parties agree in writing to three arbitrators.
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12800. Simplified Arbitration
This rule applies to arbitrations involving [$25,000] $50,000 or less, exclusive of interest and expenses. Except as otherwise provided in this rule, all provisions of the Code apply to such arbitrations.
If any pleading increases the amount in dispute to more than [$25,000] $50,000, the arbitration will no longer be administered under this rule, and the regular provisions of the Code will apply. If an arbitrator has been appointed, that arbitrator will remain on the panel. If a three-arbitrator panel is required or requested under Rule 12401, the remaining arbitrators will be appointed by the Director in accordance with Rule 12403(c) or Rule 12403(d). If no arbitrator has been appointed, the entire panel will be appointed in accordance with the Neutral List Selection System.
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Industry Code
13401. Number of Arbitrators
If the amount of a claim is [$25,000] $50,000 or less, exclusive of interest and expenses, the panel will consist of one arbitrator and the claim is subject to the simplified arbitration procedures under Rule 13800.
If the amount of a claim is more than [$25,000] $50,000 but not more than $100,000, exclusive of interest and expenses, the panel will consist of one arbitrator unless the parties agree in writing to three arbitrators.
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13800. Simplified Arbitration
This rule applies to arbitrations involving [$25,000] $50,000 or less, exclusive of interest and expenses. Except as otherwise provided in this rule, all provisions of the Code apply to such arbitrations.
If any pleading increases the amount in dispute to more than [$25,000] $50,000, the arbitration will no longer be administered under this rule, and the regular provisions of the Code will apply. If an arbitrator has been appointed, that arbitrator will remain on the panel. If a three-arbitrator panel is required or requested under Rule 13401, the remaining arbitrators will be appointed by the Director in accordance with Rule 13406(b). If no arbitrator has been appointed, the entire panel will be appointed in accordance with the Neutral List Selection System.
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