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Sep 14 2009 - Jun 5 2011Jun 6 2011 onwards

13806. Promissory Note Proceedings

(a) Applicability of Rule
This rule applies to arbitrations solely involving a member's claim that an associated person failed to pay money owed on a promissory note. To proceed under this rule, a claim may not include any additional allegations. Except as otherwise provided in this rule, all provisions of the Code apply to such arbitrations.
(b) Number of Arbitrators
(1) The Director will appoint one arbitrator if:
•   the associated person does not file an answer;
•   the associated person files an answer but does not allege any counterclaims or third party claims; or
•   the associated person files an answer which includes any counterclaims or third party claims requesting money damages, and the amount of the counterclaims or third party claims is not more than $100,000, exclusive of interest and expenses.
(2) The Director will appoint three arbitrators if the associated person files any counterclaims or third party claims and the amount of the counterclaims or third party claims is more than $100,000, exclusive of interest and expenses, or is unspecified, or if the counterclaims or third party claims do not request money damages.
(c) Composition of Panel
(1) If the panel consists of one arbitrator, the arbitrator will be a public arbitrator selected from the chairperson roster described in Rule 12400(c) of the Code of Arbitration Procedure for Customer Disputes, unless the parties agree in writing otherwise.
(2) If the panel consists of three arbitrators, one arbitrator will be a public arbitrator selected from the chairperson roster described in Rule 12400(c) of the Code of Arbitration Procedure for Customer Disputes, unless the parties agree in writing otherwise; one arbitrator will be selected from the roster of public arbitrators; and one arbitrator will be selected from the roster of non-public arbitrators.
(3) If the Director appoints a panel pursuant to (c)(1) above, and an associated person subsequently files a counterclaim or third party claim that requires appointment of a three-arbitrator panel, the appointed arbitrator will remain on the panel, and will serve as chairperson. In addition, one arbitrator will be selected from the roster of public arbitrators; and one arbitrator will be selected from the roster of non-public arbitrators.
(d) Discovery
(1) If the associated person does not file an answer, discovery will be conducted under Rule 13800(d) concerning Simplified Arbitration.
(2) If the associated person files an answer, discovery will be conducted under the 13500 series of rules.
(e) Hearings
(1) If the associated person does not file an answer, no initial prehearing conference or hearing will be held, and the arbitrator will render an award based on the pleadings and other materials submitted by the parties.
(2) If the associated person files an answer, a hearing will be held. If a hearing is held, the regular provisions of the Code relating to prehearing conferences and hearings, including fee provisions and payment of arbitrators, will apply.
(f) Arbitrator Honoraria
FINRA will pay the arbitrator an honorarium of $125 for each arbitration administered under paragraph (e)(1).
Amended by SR-FINRA-2011-005 eff. June 6, 2011.
Adopted by SR-FINRA-2009-015 eff. Sep. 14, 2009.

Selected Notices: 09-48, 11-22.

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