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  • 10300. UNIFORM CODE OF ARBITRATION

    This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

    • 10301. Required Submission

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Any dispute, claim, or controversy eligible for submission under the Rule 10100 Series between a customer and a member and/or associated person arising in connection with the business of such member or in connection with the activities of such associated persons shall be arbitrated under this Code, as provided by any duly executed and enforceable written agreement or upon the demand of the customer. A claim involving a member in the following categories shall be ineligible for submission to arbitration under the Code unless the customer agrees in writing to arbitrate the claim after it has arisen:
      (1) A member whose membership is terminated, suspended, canceled, or revoked;
      (2) A member that has been expelled from FINRA; or
      (3) A member that is otherwise defunct.
      (b) Under this Code, the Director of Arbitration, upon approval of the Executive Committee of the National Arbitration and Mediation Committee, or the National Arbitration and Mediation Committee, shall have the right to decline the use of its arbitration facilities in any dispute, claim, or controversy, where, having due regard for the purposes of FINRA and the intent of this Code, such dispute, claim, or controversy is not a proper subject matter for arbitration.
      (c) Claims which arise out of transactions in a readily identifiable market may, with the consent of the Claimant, be referred to the arbitration forum for that market by FINRA.
      (d) Class Action Claims
      (1) A claim submitted as a class action shall not be eligible for arbitration under this Code at FINRA.
      (2) Any claim filed by a member or members of a putative or certified class action is also ineligible for arbitration at FINRA if the claim is encompassed by a putative or certified class action filed in federal or state court, or is ordered by a court to an arbitral forum not sponsored by a self-regulatory organization for classwide arbitration. However, such claims shall be eligible for arbitration in accordance with paragraph (a) or pursuant to the parties' contractual agreement, if any, if a claimant demonstrates that it has elected not to participate in the putative or certified class action or, if applicable, has complied with any conditions for withdrawing from the class prescribed by the court.
      Disputes concerning whether a particular claim is encompassed by a putative or certified class action shall be referred by the Director of Arbitration to a panel of arbitrators in accordance with Rule 10302 or Rule 10308, as applicable. Either party may elect instead to petition the court with jurisdiction over the putative or certified class action to resolve such disputes. Any such petition to the court must be filed within ten business days of receipt of notice that the Director of Arbitration is referring the dispute to a panel of arbitrators.
      (3) No member or associated person shall seek to enforce any agreement to arbitrate against a customer, other member or person associated with a member who has initiated in court a putative class action or is a member of a putative or certified class with respect to any claims encompassed by the class action unless and until: (A) the class certification is denied; (B) the class is decertified; (C) the customer, other member or person associated with a member is excluded from the class by the court; or (D) the customer, other member or person associated with a member elects not to participate in the putative or certified class action or, if applicable, has complied with any conditions for withdrawing from the class prescribed by the court.
      (4) No member or associated person shall be deemed to have waived any of its rights under this Code or under any agreement to arbitrate to which it is party except to the extent stated in this paragraph.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2001-08 eff. June 11, 2001.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended by SR-NASD-93-65 eff. Apr. 20, 1994.
      Amended by SR-NASD-92-28 eff. Oct. 28, 1992.
      Amended by SR-NASD-91-49 eff. Jan. 2, 1992.

      Selected Notices: 84-51, 92-65, 01-29, 08-57.

    • 10302. Simplified Arbitration

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Any dispute, claim, or controversy arising between a public customer(s) and an associated person or a member subject to arbitration under this Code involving a dollar amount not exceeding $25,000, exclusive of attendant costs and interest, shall be arbitrated as hereinafter provided.
      (b) The Claimant shall file with the Director of Arbitration an executed Submission Agreement and a copy of the Statement of Claim of the controversy in dispute and the required deposit, together with documents in support of the Claim. Sufficient additional copies of the Submission Agreement and the Statement of Claim and supporting documents shall be provided to the Director of Arbitration for each party and the arbitrator. The Statement of Claim shall specify the relevant facts, the remedies sought and whether a hearing is demanded.
      (c) The Claimant shall pay a non-refundable filing fee and shall remit a hearing session deposit as specified in Rule 10332 of this Code upon the filing of the Submission Agreement. The final disposition of the fee or deposit shall be determined by the arbitrator.
      (d) The Director of Arbitration shall endeavor to serve promptly by mail or otherwise on the Respondent(s) one (1) copy of the Submission Agreement and one (1) copy of the Statement of Claim. Within twenty (20) calendar days from receipt of the Statement of Claim, Respondent(s) shall serve each party with an executed Submission Agreement and a copy of Respondent's Answer. Respondent's executed Submission Agreement and Answer shall also be filed with the Director of Arbitration with sufficient additional copies for the arbitrator(s) along with any deposit required under the schedule of fees for customer disputes. The Answer shall designate all available defenses to the Claim and may set forth any related Counterclaim and/or related Third-Party Claim the Respondent(s) may have against the Claimant or any other person. If the Respondent(s) has interposed a Third-Party Claim, the Respondent(s) shall serve the Third-Party Respondent with an executed Submission Agreement, a copy of the Respondent's Answer containing the Third-Party Claim, and a copy of the original Claim filed by the Claimant. The Third-Party Respondent shall respond in the manner herein provided for response to the Claim. If the Respondent(s) files a related Counterclaim exceeding $25,000 exclusive of attendant costs and interest, the arbitrator may refer the Claim, Counterclaim and/or Third-Party Claim, if any, to a panel of three (3) arbitrators in accordance with Rule 10308 or, he may dismiss the Counterclaim and/or Third-Party Claim without prejudice to the Counterclaimant(s) and/or Third-Party Claimant(s) pursuing the Counterclaim and/or Third Party Claim in a separate proceeding. The costs to the Claimant under either proceeding shall in no event exceed the total amount specified in Rule 10332.
      (e) All parties shall serve on all other parties and the Director of Arbitration, with sufficient additional copies for the arbitrator(s), a copy of the Answer, Counterclaim, Third-Party Claim, Amended Claim, or other responsive pleading, if any. The Claimant, if a Counterclaim is asserted against him, shall within ten (10) calendar days either (1) serve on each party and on the Director of Arbitration, with sufficient additional copies for the arbitrator(s), a Reply to any Counterclaim or, (2) if the amount of the Counterclaim exceeds the Claim, shall have the right to file a statement withdrawing the Claim. If the Claimant withdraws the Claim, the proceedings shall be discontinued without prejudice to the rights of the parties.
      (f) The dispute, claim or controversy shall be submitted to a single public arbitrator knowledgeable in the securities industry appointed by the Director of Arbitration. Unless the public customer demands or consents to a hearing, or the arbitrator calls a hearing, the arbitrator shall decide the dispute, claim or controversy solely upon the pleadings and evidence filed by the parties. If a hearing is necessary, such hearing shall be held as soon as practicable at a locale selected by the Director of Arbitration.
      (g) The Director of Arbitration may grant extensions of time to file any pleading upon a showing of good cause.
      (h)(1) The arbitrator shall be authorized to require the submission of further documentary evidence as he, in his sole discretion, deems advisable.
      (2) If a hearing is demanded or consented to in accordance with paragraph (f), the General Provisions Governing Pre-Hearing Proceedings under Rule 10321 shall apply.
      (3) If no hearing is demanded or consented to, all requests for document production shall be submitted in writing to the Director of Arbitration within ten (10) business days of notification of the identity of the arbitrator selected to decide the case. The requesting party shall serve simultaneously its request for document production on all parties. Any response or objections to the requested document production shall be served on all parties and filed with the Director of Arbitration within five (5) business days of receipt of the requests for production. The appointed arbitrator shall resolve all requests under this Rule on the papers submitted.
      (i) Upon the request of the arbitrator, the Director of Arbitration shall appoint two (2) additional arbitrators to the panel which shall decide the matter in controversy.
      (j) In any case where there is more than one (1) arbitrator, the majority shall be public arbitrators.
      (k) In his discretion, the arbitrator may, at the request of any party, permit such party to submit additional documentation relating to the pleadings.
      (l) Except as otherwise provided herein, the general arbitration rules of FINRA shall be applicable to proceedings instituted under this Rule.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-97-22 eff. Nov. 17, 1998.
      Amended eff. Oct. 1, 1984; Apr. 1, 1988; May 10, 1989; June 1, 1990; Apr. 26, 1991; Jan. 8, 1992; Sept. 8, 1992.

      Selected Notices: 98-90, 08-57.

      • IM-10302. Related Counterclaim

        This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

        As used in Rule 10302, the term "related Counterclaim" shall mean any Counterclaim related to a customer's accounts with a member.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

        Selected Notice: 08-57.

    • 10303. Hearing Requirements—Waiver of Hearing

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Any dispute, claim or controversy except as provided in Rule 10203 (Simplified Industry Arbitration) or Rule 10302 (Simplified Arbitration), shall require a hearing unless all parties waive such hearing in writing and request that the matter be resolved solely upon the pleadings and documentary evidence.
      (b) Notwithstanding a written waiver of a hearing by the parties, a majority of the arbitrators may call for and conduct a hearing. In addition, any arbitrator may request the submission of further evidence.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10304. Time Limitation Upon Submission

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) No dispute, claim, or controversy shall be eligible for submission to arbitration under this Code where six (6) years have elapsed from the occurrence or event giving rise to the act or dispute, claim or controversy. The panel will resolve any questions regarding the eligibility of a claim under this Rule.
      (b) Dismissal of a claim under this Rule does not prohibit a party from pursuing the claim in court. By requesting dismissal of a claim under this Rule, the requesting party agrees that if the panel dismisses a claim under the Rule, the party that filed the dismissed claim may withdraw any remaining related claims without prejudice and may pursue all of the claims in court.
      (c) This Rule shall not extend applicable statutes of limitations; nor shall the six-year time limit on the submission of claims apply to any claim that is directed to arbitration by a court of competent jurisdiction upon request of a member or associated person.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2003-101 eff. May 1, 2005.
      Amended eff. Oct. 1, 1984.

      Selected Notices: 05-10, 08-57.

    • 10305. Dismissal of Proceedings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) At any time during the course of an arbitration, the arbitrators may, either upon their own initiative or at the request of a party, dismiss the proceeding and refer the parties to their judicial remedies, or to any dispute resolution forum agreed to by the parties, without prejudice to any claims or defenses available to any party.
      (b) The arbitrators may dismiss a claim, defense, or proceeding with prejudice as a sanction for willful and intentional material failure to comply with an order of the arbitrator(s) if lesser sanctions have proven ineffective.
      (c) The arbitrators shall at the joint request of all the parties dismiss the proceedings.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-97-34 eff. Aug. 6, 1997; SEC Rel. No. 34-38907 (8/14/97).

      Selected Notice: 08-57.

    • 10306. Settlements

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Parties to an arbitration may agree to settle their dispute at any time.
      (b) If the parties agree to settle their dispute, they will remain responsible for payment of fees incurred, including fees for previously scheduled hearing sessions and fees incurred as a result of adjournments, pursuant to Rule 10319.
      (c) The terms of a settlement agreement do not need to be disclosed to FINRA. However, if the parties fail to agree on the allocation of outstanding fees, the fees shall be divided equally among all parties.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2003-164 eff. Aug. 16, 2004.
      Amended by SR-NASD-2001-21 eff. Nov. 19, 2001.

      Selected Notices: 01-70, 04-53, 08-57.

    • 10307. Tolling of Time Limitation(s) for the Institution of Legal Proceedings and Extension of Time Limitation(s) for Submission to Arbitration

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Where permitted by applicable law, the time limitations which would otherwise run or accrue for the institution of legal proceedings shall be tolled where a duly executed Submission Agreement is filed by the Claimant(s). The tolling shall continue for such period as FINRA shall retain jurisdiction upon the matter submitted.
      (b) The six (6) year time limitation upon submission to arbitration shall not apply when the parties have submitted the dispute, claim or controversy to a court of competent jurisdiction. The six (6) year time limitation shall not run for such period as the court shall retain jurisdiction upon the matter submitted.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended eff. Oct. 1, 1984.

      Selected Notice: 08-57.

    • 10308. Selection of Arbitrators

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Definitions
      (1) "day"
      For purposes of this Rule, the term "day" means calendar day.
      (2) "claimant"
      For purposes of this Rule, the term "claimant" means one or more persons who file a single claim.
      (3) "Neutral List Selection System"
      The term "Neutral List Selection System" means the software that maintains the roster of arbitrators and performs various functions relating to the selection of arbitrators.
      (4) "non-public arbitrator"
      The term "non-public arbitrator" means a person who is otherwise qualified to serve as an arbitrator and:
      (A) is, or within the past 5 years, was:
      (i) associated with, including registered through, a broker or a dealer (including a government securities broker or dealer or a municipal securities dealer);
      (ii) registered under the Commodity Exchange Act;
      (iii) a member of a commodities exchange or a registered futures association; or
      (iv) associated with a person or firm registered under the Commodity Exchange Act;
      (B) is retired from, or spent a substantial part of a career, engaging in any of the business activities listed in subparagraph (4)(A);
      (C) is an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional work, in the last two years, to clients who are engaged in any of the business activities listed in subparagraph (4)(A); or
      (D) is an employee of a bank or other financial institution and effects transactions in securities, including government or municipal securities, and commodities futures or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities.
      (5) "public arbitrator"
      (A) The term "public arbitrator" means a person who is otherwise qualified to serve as an arbitrator and:
      (i) is not engaged in the conduct or activities described in paragraphs (a)(4)(A) through (D);
      (ii) was not engaged in the conduct or activities described in paragraphs (a)(4)(A) through (D) for a total of 20 years or more;
      (iii) is not an investment adviser;
      (iv) is not an attorney, accountant, or other professional whose firm derived 10 percent or more of its annual revenue in the past 2 years from any persons or entities listed in paragraph (a)(4)(A);
      (v) is not employed by, and is not the spouse or an immediate family member of a person who is employed by, an entity that directly or indirectly controls, is controlled by, or is under common control with, any partnership, corporation, or other organization that is engaged in the securities business;
      (vi) is not a director or officer of, and is not the spouse or an immediate family member of a person who is a director or officer of, an entity that directly or indirectly controls, is controlled by, or is under common control with, any partnership, corporation, or other organization that is engaged in the securities business; and
      (vii) is not the spouse or an immediate family member of a person who is engaged in the conduct or activities described in paragraphs (a)(4)(A) through (D).
      (B) For purposes of this Rule, the term "immediate family member" means:
      (i) a person's parent, stepparent, child, or stepchild;
      (ii) a member of a person's household;
      (iii) an individual to whom a person provides financial support of more than 50 percent of the individual's annual income; or
      (iv) a person who is claimed as a dependent for federal income tax purposes.
      (6) "respondent"
      For purposes of this Rule, the term "respondent" means one or more persons who individually or jointly file an answer to a complaint.
      (7) "send"
      For purposes of this Rule, the term "send" means to send by first class mail, facsimile, or any other method available and convenient to the parties and the Director.
      (b) Composition of Arbitration Panel; Preparation of Lists for Mailing to Parties
      (1) Composition of Arbitration Panel
      (A) Claims of $50,000 or Less
      If the amount of a claim is $50,000 or less, the Director shall appoint an arbitration panel composed of one public arbitrator, unless the parties agree to the appointment of a non-public arbitrator.
      (i) If the amount of a claim is $25,000 or less and an arbitrator appointed to the case requests that a panel of three arbitrators be appointed, the Director shall appoint an arbitration panel composed of one non-public arbitrator and two public arbitrators, unless the parties agree to a different panel composition.
      (ii) If the amount of a claim is greater than $25,000 and not more than $50,000 and a party in its initial filing or an arbitrator appointed to the case requests that a panel of three arbitrators be appointed, the Director shall appoint an arbitration panel composed of one non-public arbitrator and two public arbitrators, unless the parties agree to a different panel composition.
      (B) Claims of More Than $50,000
      If the amount of a claim is more than $50,000, the Director shall appoint an arbitration panel composed of one non-public arbitrator and two public arbitrators, unless the parties agree to a different panel composition.
      (2) One List for Panel of One Arbitrator
      If one arbitrator will serve as the arbitration panel, the Director shall send to the parties one list of public arbitrators, unless the parties agree otherwise.
      (3) Two Lists for Panel of Three Arbitrators
      If three arbitrators will serve as the arbitration panel, the Director shall send two lists to the parties, one with the names of public arbitrators and one with the names of non-public arbitrators. The lists shall contain numbers of public and non-public arbitrators, in a ratio of approximately two to one, respectively, to the extent possible, based on the roster of available arbitrators.
      (4) Preparation of Lists
      (A) Except as provided in subparagraph (B) below, the Neutral List Selection System shall generate the lists of public and non-public arbitrators on a rotating basis within a designated geographic hearing site and shall exclude arbitrators based upon conflicts of interest identified within the Neutral List Selection System database.
      (B) If a party requests that the lists include arbitrators with expertise classified in the Neutral List Selection System, the lists may include some arbitrators having the designated expertise.
      (5) Sending of Lists to Parties
      The Director shall send the lists of arbitrators to all parties at the same time approximately 30 days after the last answer is due.
      (6) Information About Arbitrators
      The Director shall send to the parties employment history for each listed arbitrator for the past 10 years and other background information. If a party requests additional information about an arbitrator, the Director shall send such request to the arbitrator, and shall send the arbitrator's response to all parties at the same time. When a party requests additional information, the Director may, but is not required to, toll the time for the parties to return the ranked lists under paragraph (c)(2).
      (c) Striking, Ranking, and Appointing Arbitrators on Lists
      (1) Striking and Ranking Arbitrators
      (A) Striking An Arbitrator
      A party may strike one or more of the arbitrators from each list for any reason.
      (B) Ranking — Panel of One Arbitrator
      Each party shall rank all of the arbitrators remaining on the list by assigning each arbitrator a different, sequential, numerical ranking, with a "1" rank indicating the party's first choice, a "2" indicating the party's second choice, and so on.
      (C) Ranking — Panel of Three Arbitrators
      Each party shall rank all of the public arbitrators remaining on the list by assigning each arbitrator a different, sequential, numerical ranking, with a "1" rank indicating the party's first choice, a "2" indicating the party's second choice, and so on. Each party separately shall rank all of the non-public arbitrators remaining on the list, using the same procedure.
      (2) Period for Ranking Arbitrators; Failure to Timely Strike and Rank
      A party must return to the Director the list or lists with the rankings not later than 20 days after the Director sent the lists to the parties, unless the Director has extended the period. If a party does not timely return the list or lists, the Director shall treat the party as having retained all the arbitrators on the list or lists and as having no preferences.
      (3) Process of Consolidating Parties' Rankings
      The Director shall prepare one or two consolidated lists of arbitrators, as appropriate under paragraph (b)(2) or (b)(3), based upon the parties' numerical rankings. The arbitrators shall be ranked by adding the rankings of all claimants together and all respondents together, including third-party respondents, to produce separate consolidated rankings of the claimants and the respondents. The Director shall then rank the arbitrators by adding the consolidated rankings of the claimants, the respondents, including third-party respondents, and any other party together, to produce a single consolidated ranking number, excluding arbitrators who were stricken by any party.
      (4) Appointment of Arbitrators
      (A) Appointment of Listed Arbitrators
      The Director shall appoint arbitrators to serve on the arbitration panel based on the order of rankings on the consolidated list or lists, subject to availability and disqualification.
      (B) Discretion to Appoint Arbitrators Not on List
      If the number of arbitrators available to serve from the consolidated list is not sufficient to fill a panel, the Director shall appoint one or more arbitrators to complete the arbitration panel. Unless the parties agree otherwise, the Director may not appoint a non-public arbitrator under paragraphs (a)(4)(B) or (a)(4)(C). The Director shall provide the parties information about the arbitrator as provided in paragraph (b)(6), and the parties shall have the right to object to the arbitrator as provided in paragraph (d)(1).
      (5) Selecting a Chairperson for the Panel
      The parties shall have 7 days from the date the Director sends notice of the names of the arbitrators to select a chairperson. If the parties notify Dispute Resolution staff prior to the expiration of the original deadline that they need more time in which to reach an agreement, Dispute Resolution staff will extend the time to select a chairperson for an additional 8 days. If the parties cannot agree within the allotted time, the Director shall appoint a chairperson from the panel as follows:
      (A) The Director shall appoint as the chairperson the public arbitrator who is the most highly ranked by the parties as long as the person is not an attorney, accountant, or other professional who has devoted 50% or more of his or her professional or business activities, within the last two years, to representing or advising public customers in matters relating to disputed securities or commodities transactions or similar matters.
      (B) If the most highly ranked public arbitrator is subject to the exclusion set forth in subparagraph (A), the Director shall appoint as the chairperson the other public arbitrator, as long as the person also is not subject to the exclusion set forth in subparagraph (A).
      (C) If both public arbitrators are subject to the exclusion set forth in subparagraph (A), the Director shall appoint as the chairperson the public arbitrator who is the most highly ranked by the parties.
      (6) Additional Parties
      If a party is added to an arbitration proceeding before the Director has consolidated the other parties' rankings, the Director shall send to that party the list or lists of arbitrators and permit the party to strike and rank the arbitrators. The party must return to the Director the list or lists with numerical rankings not later than 20 days after the Director sent the lists to the party. The Director shall then consolidate the rankings as specified in this paragraph (c).
      (d) Disqualification and Removal of Arbitrator Due to Conflict of Interest or Bias
      (1) Disqualification By Director
      After the appointment of an arbitrator and prior to the commencement of the earlier of (A) the first pre-hearing conference or (B) the first hearing, if the Director or a party objects to the continued service of the arbitrator, the Director shall determine if the arbitrator should be disqualified. If the Director sends a notice to the parties that the arbitrator shall be disqualified, the arbitrator will be disqualified unless the parties unanimously agree otherwise in writing and notify the Director not later than 15 days after the Director sent the notice.
      (2) Removal by Director
      After the commencement of the earlier of (A) the first pre-hearing conference or (B) the first hearing, the Director may remove an arbitrator from an arbitration panel based on information that is required to be disclosed pursuant to Rule 10312 and that was not previously disclosed.
      (3) Standards for Deciding Challenges for Cause
      The Director will grant a party's request to disqualify an arbitrator if it is reasonable to infer, based on information known at the time of the request, that the arbitrator is biased, lacks impartiality, or has an interest in the outcome of the arbitration. The interest or bias must be direct, definite, and capable of reasonable demonstration, rather than remote or speculative.
      (4) Vacancies Created by Disqualification or Resignation
      Prior to the commencement of the earlier of (A) the first pre-hearing conference or (B) the first hearing, if an arbitrator appointed to an arbitration panel is disqualified or is otherwise unable or unwilling to serve, the Director shall appoint from the consolidated list of arbitrators the arbitrator who is the most highly ranked available arbitrator of the proper classification remaining on the list. If there are no available arbitrators of the proper classification on the consolidated list, the Director shall appoint an arbitrator of the proper classification subject to the limitation set forth in paragraph (c)(4)(B). The Director shall provide the parties information about the arbitrator as provided in paragraph (b)(6), and the parties shall have the right to object to the arbitrator as provided in paragraph (d)(1).
      (e) Discretionary Authority
      The Director may exercise discretionary authority and make any decision that is consistent with the purposes of this Rule and the Rule 10000 Series to facilitate the appointment of arbitration panels and the resolution of arbitration disputes.
      (f) Challenges by Customers
      In cases involving public customers, any close questions regarding arbitrator classification or challenges for cause brought by a customer will be resolved in favor of the customer.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2006-136 eff. Jan. 15, 2007.
      Amended by SR-NASD-2005-094 eff. Jan. 15, 2007.
      Amended by SR-NASD-2004-164 eff. March 9, 2005 with a delayed operational date [Approval Order].
      Amended by SR-NASD-2004-39 eff. Sept. 17, 2004.
      Amended by SR-NASD-2003-95 eff. July 19, 2004.
      Amended by SR-NASD-2004-87 eff. June 7, 2004.
      Amended by SR-NASD-2000-34 eff. Feb. 12, 2001.
      Amended by SR-NASD-98-64 eff. Nov. 17, 1998.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended by SR-NASD-97-22 eff. Nov. 17, 1998.
      Amended eff. July 1, 1986; Apr. 1, 1988; May 10, 1989; Oct. 7, 1992.

      Selected Notice: 98-90; 01-13; 04-49; 04-61; 06-64, 08-57.

      • IM-10308. Arbitrators Who Also Serve as Mediators

        This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

        Mediation services performed by mediators who are also arbitrators shall not be included in the definition of "professional work" for purposes of Rule 10308(a)(4)(C), so long as the mediator is acting in the capacity of a mediator and is not representing a party in the mediation.
        Mediation fees received by mediators who are also arbitrators shall not be included in the definition of "revenue" for purposes of Rule 10308(a)(5)(A)(iv), so long as the mediator is acting in the capacity of a mediator and is not representing a party in the mediation.
        Arbitrators who also serve as mediators shall disclose that fact on their arbitrator disclosure forms.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Adopted by SR-NASD-2005-007 eff. May 6, 2005.

        Selected Notices: 05-36, 08-57.

    • 10309. Composition of Panels

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      Except as otherwise specifically provided in Rule 10308, the individuals who shall serve on a particular arbitration panel shall be determined by the Director. Except as otherwise specifically provided in Rule 10308, the Director may name the chairman of the panel.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.

      Selected Notices: 98-90, 08-57.

    • 10310. Notice of Selection of Arbitrators

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) The Director shall inform the parties of the arbitrators' names and employment histories for the past 10 years, as well as information disclosed pursuant to Rule 10312, at least 15 business days prior to the date fixed for the first hearing session. A party may make further inquiry of the Director concerning an arbitrator's background. In the event that, prior to the first hearing session, any arbitrator should become disqualified, resign, die, refuse or otherwise be unable to perform as an arbitrator, the Director shall appoint a replacement arbitrator to fill the vacancy on the panel. The Director shall inform the parties as soon as possible of the name and employment history of the replacement arbitrator for the past 10 years, as well as information disclosed pursuant to Rule 10312. A party may make further inquiry of the Director concerning the replacement arbitrator's background and within the time remaining prior to the first hearing session or the 10 day period provided under Rule 10311, whichever is shorter, may exercise its right to challenge the replacement arbitrator as provided in Rule 10311.
      (b) This Rule shall not apply to arbitration proceedings that are subject to Rule 10308.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended by SR-NASD-97-34 eff. Aug. 6, 1997; SEC Rel. No. 34-38907 (8/14/97).
      Amended eff. Sept. 19, 1988; May 10, 1989.

      Selected Notices: 98-90, 08-57.

    • 10311. Peremptory Challenge

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) In an arbitration proceeding, except as provided in Rule 10335, each party shall have the right to one peremptory challenge. In arbitrations where there are multiple Claimants, Respondents, and/or Third-Party Respondents, the Claimants shall have one peremptory challenge, the Respondents shall have one peremptory challenge, and the Third-Party Respondents shall have one peremptory challenge. The Director may in the interests of justice award additional peremptory challenges to any party to an arbitration proceeding. Unless extended by the Director, a party wishing to exercise a peremptory challenge must do so by notifying the Director in writing within 10 business days of notification of the identity of the person(s) named under Rule 10310 or Rule 10321(d) or (e), whichever comes first. There shall be unlimited challenges for cause.
      (b) This Rule shall not apply to arbitration proceedings that are subject to Rule 10308.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended by SR-NASD-97-34 eff. Aug. 6, 1997; SEC Rel. No. 34-38907 (8/14/97).
      Amended by SR-NASD-93-38 eff. Jan. 3, 1996.
      Amended by SR-NASD-91-49 eff. Jan. 2, 1992.
      Amended eff. Oct. 1, 1984.

      Selected Notices: 98-90, 08-57.

    • 10312. Disclosures Required of Arbitrators and Director's Authority to Disqualify

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Each arbitrator shall be required to disclose to the Director of Arbitration any circumstances which might preclude such arbitrator from rendering an objective and impartial determination. Each arbitrator shall disclose:
      (1) Any direct or indirect financial or personal interest in the outcome of the arbitration;
      (2) Any existing or past financial, business, professional, family, social, or other relationships or circumstances that are likely to affect impartiality or might reasonably create an appearance of partiality or bias. Persons requested to serve as arbitrators must disclose any such relationships or circumstances that they have with any party or its counsel, or with any individual whom they have been told will be a witness. They must also disclose any such relationship or circumstances involving members of their families or their current employers, partners, or business associates.
      (b) Persons who are requested to accept appointment as arbitrators must make a reasonable effort to inform themselves of any interests, relationships or circumstances described in paragraph (a) above.
      (c) The obligation to disclose interests, relationships, or circumstances that might preclude an arbitrator from rendering an objective and impartial determination described in paragraph (a) is a continuing duty that requires a person who accepts appointment as an arbitrator to disclose, at any stage of the arbitration, any such interests, relationships, or circumstances that arise, or are recalled or discovered.
      (d) Removal by Director
      (1) The Director may remove an arbitrator based on information that is required to be disclosed pursuant to this Rule.
      (2) After the commencement of the earlier of (A) the first pre-hearing conference or (B) the first hearing, the Director may remove an arbitrator based only on information not known to the parties when the arbitrator was selected. The Director's authority under this subparagraph (2) may be exercised only by the Director of the Office of Dispute Resolution.
      (3) The Director will grant a party's request to disqualify an arbitrator if it is reasonable to infer, based on information known at the time of the request, that the arbitrator is biased, lacks impartiality, or has an interest in the outcome of the arbitration. The interest or bias must be direct, definite, and capable of reasonable demonstration, rather than remote or speculative.
      (e) The Director shall inform the parties to an arbitration proceeding of any information disclosed to the Director under this Rule unless either the arbitrator who disclosed the information withdraws voluntarily as soon as the arbitrator learns of any interest, relationship, or circumstances described in paragraph (a) that might preclude the arbitrator from rendering an objective and impartial determination in the proceeding, or the Director removes the arbitrator.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2003-95 eff. July 19, 2004.
      Amended by SR-NASD-2000-34 eff. Mar. 8, 2001.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended eff. May 10, 1989.

      Selected Notices: 98-90; 01-13; 04-49, 08-57, 16-04.

    • 10313. Disqualification or Other Disability of Arbitrators

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) In the event that any arbitrator, after the commencement of the earlier of (1) the first pre-hearing conference or (2) the first hearing but prior to the rendition of the award, should become disqualified, resign, die, refuse or otherwise be unable to perform as an arbitrator, the Director shall appoint a replacement arbitrator to fill the vacancy and the hearing shall continue. In the alternative, if all parties agree to proceed with any remaining arbitrator(s), they shall inform the Director in writing within 5 business days of notification of the vacancy, and the remaining arbitrator(s) shall continue with the hearing and determination of the controversy.
      (b) The Director shall inform the parties as soon as possible of the name and employment history of the replacement arbitrator for the past 10 years, as well as information disclosed pursuant to Rule 10312. A party may make further inquiry of the Director concerning the replacement arbitrator's background. If the arbitration proceeding is subject to Rule 10308, the party may exercise his or her right to challenge the replacement arbitrator within the time remaining prior to the next scheduled hearing session by notifying the Director in writing of the name of the arbitrator challenged and the basis for such challenge. If the arbitration proceeding is not subject to Rule 10308, within the time remaining prior to the next scheduled hearing session or the 10 day period provided under Rule 10311, whichever is shorter, a party may exercise the party's right to challenge the replacement arbitrator as provided in Rule 10311.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2002-38 eff. Apr. 22, 2002.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended by SR-NASD-97-34 eff. Aug. 6, 1997.
      Amended by SR-NASD-89-19 eff. May 10, 1989.
      Amended eff. Sept. 19, 1988.

      Selected Notices: 98-90, 08-57.

    • 10314. Initiation of Proceedings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      Except as otherwise provided herein, an arbitration proceeding under this Code shall be instituted as follows:
      (a) Statement of Claim
      (1) The Claimant shall file with the Director of Arbitration an executed Submission Agreement, a Statement of Claim of the controversy in dispute, together with the documents in support of the Claim, and the required deposit. Sufficient additional copies of the Submission Agreement and the Statement of Claim and supporting documents shall be provided to the Director of Arbitration for each party and each arbitrator. The Statement of Claim shall specify the relevant facts and the remedies sought. The Director of Arbitration shall endeavor to serve promptly by mail or otherwise on the Respondent(s) one (1) copy of the Submission Agreement and one (1) copy of the Statement of Claim.
      (2) A Claimant or counsel (referred to herein collectively as "Claimant") may use the online claim notification and filing procedure to complete part of the arbitration claim filing process through the Internet. To commence this process, a Claimant may complete a Claim Information Form that can be accessed through the FINRA Web site. In completing the Claim Information Form, the Claimant may attach an electronic version of the Statement of Claim to the form, provided it does not exceed 50 pages. Once this online form has been completed, an Office of Dispute Resolution Tracking Form will be generated and displayed for the Claimant to reproduce as necessary. The Claimant shall then file with the Director of Arbitration the rest of the materials required in subparagraph (1), above, along with a hard copy of the Office of Dispute Resolution Tracking Form.
      (b) Answer — Defenses, Counterclaims, and/or Cross-Claims
      (1) Within 45 calendar days from receipt of the Statement of Claim, Respondent(s) shall serve each party with an executed Submission Agreement and a copy of the Respondent's Answer. Respondent's executed Submission Agreement and Answer shall also be filed with the Director of Arbitration with sufficient additional copies for the arbitrator(s) along with any deposit required under the schedule of fees. The Answer shall specify all relevant facts and available defenses to the Statement of Claim submitted and may set forth any related Counterclaim the Respondent(s) may have against the Claimant, any Cross-Claim the Respondent(s) may have against any other named Respondent(s), and any Third-Party Claim against any other party or person based upon any existing dispute, claim, or controversy subject to arbitration under this Code.
      (2)(A) A Respondent, Responding Claimant, Cross-Claimant, Cross-Respondent, or Third-Party Respondent who pleads only a general denial to a pleading that states specific facts and contentions may, upon objection by a party, in the discretion of the arbitrators, be barred from presenting any facts or defenses at the time of the hearing.
      (B) A Respondent, Responding Claimant, Cross-Claimant, Cross-Respondent, or Third-Party Respondent who fails to specify all available defenses and relevant facts in such party's answer may, upon objection by a party, in the discretion of the arbitrators, be barred from presenting such facts or defenses not included in such party's Answer at the hearing.
      (C) A Respondent, Responding Claimant, Cross-Claimant, Cross-Respondent, or Third-Party Respondent who fails to file an Answer within 45 calendar days from receipt of service of a Claim, unless the time to answer has been extended pursuant to subparagraph (5), below, may, in the discretion of the arbitrators, be barred from presenting any matter, arguments, or defenses at the hearing. Such a party may also be subject to default procedures as provided in paragraph (e) below.
      (3) Respondent(s) shall serve each party with a copy of any Third-Party Claim. The Third-Party Claim shall also be filed with the Director of Arbitration with sufficient additional copies for the arbitrator(s) along with any deposit required under the schedule of fees. Third-Party Respondent(s) shall answer in the manner provided for response to the Claim, as provided in subparagraphs (1) and (2) above.
      (4) The Claimant shall serve each party with a Reply to a Counterclaim within ten (10) days of receipt of an Answer containing a Counterclaim. The Reply shall also be filed with the Director of Arbitration with sufficient additional copies for the arbitrator(s).
      (5) The time period to file any pleading, whether such be denominated as a Claim, Answer, Counterclaim, Cross-Claim, Reply, or Third-Party Pleading, may be extended for such further period as may be granted by the Director of Arbitration or with the consent of the initial claimant. Extensions of the time period to file an Answer are disfavored and will not be granted by the Director except in extraordinary circumstances.
      (c) Service and Filing with the Director of Arbitration
      (1) Service may be effected by mail or other means of delivery. Service and filing are accomplished on the date of mailing either by first-class postage pre-paid or by means of overnight mail service or, in the case of other means of service, on the date of delivery. Filing with the Director of Arbitration shall be made on the same date as service on a party.
      (2) If a member firm and a person associated with the member firm are named parties to an arbitration proceeding at the time of the filing of the Statement of Claim, service on the person associated with the member firm may be made on the associated person or the member firm, which shall perfect service upon the associated person. If the member firm does not undertake to represent the associated person, the member firm shall serve the associated person with the Statement of Claim, shall advise all parties and the Director of Arbitration of that fact, and shall provide such associated person's current address.
      (d) Joinder and Consolidation — Multiple Parties
      (1) Permissive Joinder. All persons may join in one action as claimants if they assert any right to relief jointly, severally, or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any questions of law or fact common to all these claimants will arise in the action. All persons may be joined in one action as respondents if there is asserted against them, jointly or severally, any right to relief arising out of the same transaction, occurrence, or series of transactions or occurrences and if any questions of law or fact common to all respondents will arise in the action. A claimant or respondent need not assert rights to or defend against all the relief demanded. Judgment may be given for one or more of the claimants according to their respective rights to relief, and against one or more respondents according to their respective liabilities.
      (2) In arbitrations where there are multiple Claimants, Respondents, and/or Third-Party Respondents, the Director of Arbitration shall be authorized to determine preliminarily whether such parties should proceed in the same or separate arbitrations. Such determination will be considered subsequent to the filing of all responsive pleadings.
      (3) The Director of Arbitration shall be authorized to determine preliminarily whether claims filed separately are related and shall be authorized to consolidate such claims for hearing and award purposes.
      (4) Further determinations with respect to joinder, consolidation, and multiple parties under this paragraph (d) shall be made by the arbitration panel and shall be deemed final.
      (e) Default Procedures
      (1) A Respondent, Cross-Respondent, or Third-Party Respondent that fails to file an Answer within 45 calendar days from receipt of service of a Claim, unless the time to answer has been extended pursuant to paragraph (b)(5), may be subject to default procedures, as provided in this paragraph, if it is:
      (A) a member whose membership has been terminated, suspended, canceled, or revoked;
      (B) a member that has been expelled from FINRA;
      (C) a member that is otherwise defunct; or
      (D) an associated person whose registration is terminated, revoked, or suspended.
      (2) If all Claimants elect to use these default procedures, the Claimant(s) shall notify the Director in writing and shall send a copy of such notification to all other parties at the same time and in the same manner as the notification was sent to the Director.
      (3) If the case meets the requirements for proceeding under default procedures, the Director shall notify all parties.
      (4) The Director shall appoint a single arbitrator pursuant to Rule 10308 to consider the Statement of Claim and other documents presented by the Claimant(s). The arbitrator may request additional information from the Claimant(s) before rendering an award. No hearing shall be held, and the default award shall have no effect on any non-defaulting party.
      (5) The Claimant(s) may not amend the claim to increase the relief requested after the Director has notified the parties that the claim will proceed under default procedures.
      (6) An arbitrator may not make an award based solely on the non-appearance of a party. The party who appears must present a sufficient basis to support the making of an award in that party's favor. The arbitrator may not award damages in an amount greater than the damages requested in the Statement of Claim, and may not award any other relief that was not requested in the Statement of Claim.
      (7) If the Respondent files an Answer after the Director has notified the parties that the claim will proceed under default procedures but before an award has been rendered, the proceedings under this paragraph shall be terminated and the case will proceed under the regular procedures.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2004-16 eff. Aug. 5, 2004.
      Amended by SR-NASD-2002-62 eff. Oct. 14, 2002.
      Amended by SR-NASD-2002-15 eff. Oct. 14, 2002.
      Amended by SR-NASD-98-07 eff. Mar. 16, 1998.
      Amended by SR-NASD-90-62 eff. May 7, 1991.
      Amended eff. Oct. 1, 1984; July 1, 1986; May 10, 1989.

      Selected Notices: 04-56, 08-57, 16-04.

    • 10315. Determination of Hearing Location

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Designation of Time and Place of Hearing
      The Director shall determine the time and place of the first meeting of the arbitration panel and the parties, whether the first meeting is a pre-hearing conference or a hearing, and shall give notice of the time and place at least 15 business days prior to the date fixed for the first meeting by personal service, registered or certified mail to each of the parties unless the parties shall, by their mutual consent, waive the notice provisions under this Rule. The arbitrators shall determine the time and place for all subsequent meetings, whether the meetings are pre-hearing conferences, hearings, or any other type of meetings, and shall give notice as the arbitrators may determine. Attendance at a meeting waives notice thereof.
      (b) Foreign Hearing Location
      (1) If the Director and all parties agree, parties may have their hearing in a foreign hearing location and conducted by foreign arbitrators, provided that the foreign arbitrators have:
      (A) met FINRA background qualifications for arbitrators;
      (B) received training on FINRA arbitration rules and procedures; and
      (C) satisfied at least the same training and testing requirements as those arbitrators who serve in U. S. locations of FINRA.
      (2) The parties shall pay an additional surcharge for each day of hearings held in a foreign hearing location. The amount of the surcharge will be determined by the Director and must be agreed to by the parties before the foreign hearing location may be used. This surcharge shall be specified in the agreement to use a foreign hearing location and shall be apportioned equally among the parties, unless they agree otherwise. The foreign arbitrators shall have the authority to apportion this surcharge as provided in Rules 10205 and 10332.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2004-042 eff. June 5, 2005.
      Amended by SR-NASD-98-48 eff. Nov. 17, 1998.
      Amended eff. May 7, 1991.

      Selected Notices: 98-90, 05-35, 08-57.

    • 10316. Representation by Counsel

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      All parties shall have the right to representation by counsel at any stage of the proceedings.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10317. Attendance at Hearings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      The attendance or presence of all persons at hearings including witnesses shall be determined by the arbitrators. However, all parties to the arbitration and their counsel shall be entitled to attend all hearings.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

      • IM-10317. Closing Arguments

        This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

        In response to recent questions concerning the order of closing argument in arbitration proceedings conducted under the auspices of FINRA, it is the practice in these proceedings to allow claimants to proceed first in closing argument, with rebuttal argument being permitted. Claimants may reserve their entire closing for rebuttal. The hearing procedures may, however, be varied in the discretion of the arbitrators, provided all parties are allowed a full and fair opportunity to present their respective cases.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

        Selected Notice: 08-57.

    • 10318. Failure to Appear

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      If any of the parties, after due notice, fails to appear at a hearing or at any continuation of a hearing session, the arbitrators may, in their discretion, proceed with the arbitration of the controversy. In such cases, all awards shall be rendered as if each party had entered an appearance in the matter submitted.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended eff. Jan. 8, 1992.

      Selected Notice: 08-57.

    • 10319. Adjournments

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) The arbitrator(s) may, in their discretion, adjourn any hearing(s) either upon their own initiative or upon the request of any party to the arbitration.
      (b) If an adjournment requested by a party is granted after arbitrators have been appointed, the party requesting an adjournment shall pay a fee equal to the initial deposit of hearing session fees for the first adjournment and twice the initial deposit of hearing session fees, not to exceed $1,500, for a second or subsequent adjournment requested by that party. The arbitrators may waive these fees in their discretion. If more than one party requests the adjournment, the arbitrators shall allocate the fees among the requesting parties.
      (c) Upon receiving a third request consented to by all parties for an adjournment, the arbitrator(s) may dismiss the arbitration without prejudice to the Claimant filing a new arbitration.
      (d) If an adjournment request is made by one or more parties and granted within three business days before a scheduled hearing session, the party or parties making the request shall pay an additional fee of $100 per arbitrator. If more than one party requests the adjournment, the arbitrators shall allocate the $100 per arbitrator fee among the requesting parties. The arbitrators may allocate all or portion of the $100 per arbitrator fee to the non-requesting party or parties, if the arbitrators determine that the non-requesting party or parties caused or contributed to the need for the adjournment. In the event that a request results in the adjournment of consecutively scheduled hearing sessions, the additional fee will be assessed only for the first of the consecutively scheduled hearing sessions. In the event that an extraordinary circumstance prevents a party or parties from making a timely adjournment request, arbitrators may use their discretion to waive the fee, provided verification of such circumstance is received.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2003-164 eff. Aug. 16, 2004.
      Amended by SR-NASD-2001-21 eff. Nov. 19, 2001.
      Amended eff. July 1, 1986; June 1, 1990; Dec. 30, 1991.

      Selected Notices: 01-70, 04-53, 08-57.

    • 10320. Acknowledgement of Pleadings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      The arbitrators shall acknowledge to all parties present that they have read the pleadings filed by the parties.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10321. General Provisions Governing Pre-Hearing Proceedings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Requests for Documents and Information
      The parties shall cooperate to the fullest extent practicable in the voluntary exchange of documents and information to expedite the arbitration. Any request for documents or other information should be specific, relate to the matter in controversy, and afford the party to whom the request is made a reasonable period of time to respond without interfering with the time set for the hearing.
      (b) Document Production and Information Exchange
      (1) Any party may serve a written request for information or documents ("information request") upon another party 45 calendar days or more after service of the Statement of Claim by the Director of Arbitration or upon filing of the Answer, whichever is earlier. The requesting party shall serve the information request on all parties and file a copy with the Director of Arbitration. The parties shall endeavor to resolve disputes regarding an information request prior to serving any objection to the request. Such efforts shall be set forth in the objection.
      (2) Unless a greater time is allowed by the requesting party, information requests shall be satisfied or objected to within thirty (30) calendar days from the date of service. Any objection to an information request shall be served by the objecting party on all parties and filed with the Director of Arbitration.
      (3) Any response to objections to an information request shall be served on all parties and filed with the Director of Arbitration within ten (10) calendar days of receipt of the objection.
      (4) Upon the written request of a party whose information request is unsatisfied, the matter will be referred by the Director of Arbitration to either a pre-hearing conference under paragraph (d) of this Rule or to a selected arbitrator under paragraph (e) of this Rule.
      (c) Pre-Hearing Exchange
      At least twenty (20) calendar days prior to the first scheduled hearing date, all parties shall serve on each other copies of documents in their possession they intend to present at the hearing and shall identify witnesses they intend to present at the hearing. The arbitrators may exclude from the arbitration any documents not exchanged or witnesses not identified. This paragraph does not require service of copies of documents or identification of witnesses which parties may use for cross-examination or rebuttal.
      (d) Pre-Hearing Conference
      (1) Upon the written request of a party, an arbitrator, or at the discretion of the Director of Arbitration, a pre-hearing conference shall be scheduled. The Director of Arbitration shall set the time and place of a pre-hearing conference and appoint a person to preside. The pre-hearing conference may be held by telephone conference call. The presiding person shall seek to achieve agreement among the parties on any issue which relates to the pre-hearing process or to the hearing, including but not limited to exchange of information, exchange or production of documents, identification of witnesses, identification and exchange of hearing documents, stipulation of facts, identification and briefing of contested issues, and any other matters which will expedite the arbitration proceedings.
      (2) Any issues raised at the pre-hearing conference that are not resolved may be referred to a single member of the arbitration panel for decision.
      (e) Decisions by Selected Arbitrator
      The Director of Arbitration may appoint a single member of the arbitration panel to decide all unresolved issues under this Rule. In matters involving public customers, such single arbitrator shall be a public arbitrator, except that the arbitrator may be either public or industry when the public customer has requested a panel consisting of a majority from the securities industry. Such arbitrator shall be authorized to act on behalf of the panel to issue subpoenas, direct appearances of witnesses and production of documents, set deadlines for compliance, and issue any other ruling which will expedite the arbitration proceedings. Decisions under this Rule shall be made upon the papers submitted by the parties, unless the arbitrator calls a hearing. The arbitrator may elect to refer any issue under this Rule to the full panel.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-98-91 eff. Jan. 11, 1999.
      Amended by SR-NASD-95-05 eff. Mar. 23, 1995.
      Amended eff. May 10, 1989.

      Selected Notice: 08-57.

    • 10322. Subpoenas and Power to Direct Appearances

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) To the fullest extent possible, parties should produce documents and make witnesses available to each other without the use of subpoenas. Arbitrators shall have the authority to issue subpoenas for the production of documents or the appearance of witnesses.
      (b) A party may make a written motion requesting that an arbitrator issue a subpoena to a party or a non-party. The motion must include a draft subpoena and must be filed with the Director, with an additional copy for the arbitrator. The requesting party must serve the motion and draft subpoena on each other party, at the same time and in the same manner as on the Director. The requesting party may not serve the motion or draft subpoena on a non-party.
      (c) If a party receiving a motion and draft subpoena objects to the scope or propriety of the subpoena, that party shall, within 10 calendar days of service of the motion, file written objections with the Director, with an additional copy for the arbitrator, and shall serve copies on all other parties at the same time and in the same manner as on the Director. The party that requested the subpoena may respond to the objections within 10 calendar days of receipt of the objections. After considering all objections, the arbitrator responsible for deciding discovery-related motions shall rule promptly on the issuance and scope of the subpoena.
      (d) If the arbitrator issues a subpoena, the party that requested the subpoena must serve the subpoena at the same time and in the same manner on all parties and, if applicable, on any non-party receiving the subpoena.
      (e) Any party that receives documents in response to a subpoena served on a non-party shall provide notice to all other parties within five days of receipt of the documents. Thereafter, any party may request copies of such documents and, if such a request is made, the documents must be provided within 10 calendar days following receipt of the request.
      (f) An arbitrator shall be empowered without resort to the subpoena process to direct the appearance of any person employed by or associated with any member of FINRA and/or the production of any records in the possession or control of such persons or members. Unless an arbitrator directs otherwise, the party requesting the appearance of a person or the production of documents under this Rule shall bear all reasonable costs of such appearance and/or production.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2005-079 eff. April 2, 2007.
      Amended eff. May 10, 1989.

      Selected Notices: 07-13, 08-57.

    • 10323. Evidence

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      The arbitrators shall determine the materiality and relevance of any evidence proffered and shall not be bound by rules governing the admissibility of evidence.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10324. Interpretation of Provisions of Code and Enforcement of Arbitrator Rulings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      The arbitrators shall be empowered to interpret and determine the applicability of all provisions under this Code and to take appropriate action to obtain compliance with any ruling by the arbitrator(s). Such interpretations and actions to obtain compliance shall be final and binding upon the parties.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended eff. Nov. 16, 1992.

      Selected Notice: 08-57.

    • 10325. Determination of Arbitrators

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      All rulings and determinations of the panel shall be by a majority of the arbitrators.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10326. Record of Proceedings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) A verbatim record by stenographic reporter or a tape, digital, or other recording of all arbitration hearings shall be kept. If a party or parties to a dispute elect to have the record transcribed, the cost of such transcription shall be borne by the party or parties making the request unless the arbitrators direct otherwise. The arbitrators may also direct that the record be transcribed. If the record is transcribed at the request of any party, a copy shall be provided to the arbitrators.
      (b) A verbatim record of mediation conducted pursuant to the Rule 14000 Series shall not be kept.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2006-102 eff. Aug. 23, 2006.
      Amended by SR-NASD-95-25 eff. Aug. 1, 1995.
      Amended eff. May 10, 1989.

      Selected Notice: 08-57.

    • 10327. Oaths of the Arbitrators and Witnesses

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      Prior to the commencement of the first session, an oath or affirmation shall be administered to the arbitrators. All testimony shall be under oath or affirmation.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10328. Amendments

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) After the filing of any pleadings, if a party desires to file a new or different pleading, such change must be made in writing and filed with the Director of Arbitration with sufficient additional copies for each arbitrator. The party filing a new or different pleading shall serve on all other parties, a copy of the new or different pleading in accordance with the provisions set forth in Rule 10314(b). The other parties may, within ten (10) business days from the receipt of service, file a response with all other parties and the Director of Arbitration in accordance with Rule 10314(b).
      (b) If a new or amended pleading increases the amount in dispute, all filing fees, hearing session deposits, surcharges, and process fees required under Rules 10332 and 10333 will be recalculated based on the amended amount in dispute.
      (c) After a panel has been appointed, no new or different pleading may be filed except for a responsive pleading as provided for in (a) above or with the panel's consent.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2001-21 eff. Nov. 19, 2001.
      Amended eff. Oct. 1, 1984 and Apr. 26, 1991.

      Selected Notices: 01-70, 08-57.

    • 10329. Reopening of Hearings

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      Where permitted by applicable law, the hearings may be reopened by the arbitrators on their own motion or at the discretion of the arbitrators upon application of a party at any time before the award is rendered.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.

      Selected Notice: 08-57.

    • 10330. Awards

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) All awards shall be in writing and signed by a majority of the arbitrators or in such manner as is required by applicable law. Such awards may be entered as a judgment in any court of competent jurisdiction.
      (b) Unless the applicable law directs otherwise, all awards rendered pursuant to this Code shall be deemed final and not subject to review or appeal.
      (c) The Director will serve a copy of the award on each party, or the representative of the party. The Director will serve the award by using any method available and convenient to the parties and the Director, and that is reasonably expected to cause the award to be delivered to all parties, or their counsel, on the same day. Methods the Director may use include, but are not limited to, registered or certified mail, hand delivery, and facsimile or other electronic transmission.
      (d) The arbitrator(s) shall endeavor to render an award within thirty (30) business days from the date the record is closed.
      (e) The award shall contain the names of the parties, the name of counsel, if any, a summary of the issues, including the type(s) of any security or product, in controversy, the damages and other relief requested, the damages and other relief awarded, a statement of any other issues resolved, the names of the arbitrators, the dates the claim was filed and the award rendered, the number and dates of hearing sessions, the location of the hearings, and the signatures of the arbitrators concurring in the award.
      (f) All awards and their contents shall be made publicly available.
      (g) Fees and assessments imposed by the arbitrators under Rules 10205 and 10332 shall be paid immediately upon the receipt of the award by the parties. Payment of such fees shall not be deemed ratification of the award by the parties.
      (h) All monetary awards shall be paid within thirty (30) days of receipt unless a motion to vacate has been filed with a court of competent jurisdiction. An award shall bear interest from the date of the award: (1) if not paid within thirty (30) days of receipt, (2) if the award is the subject of a motion to vacate which is denied, or (3) as specified by the arbitrator(s) in the award. Interest shall be assessed at the legal rate, if any, then prevailing in the state where the award was rendered, or at a rate set by the arbitrator(s).
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-97-34 eff. Aug. 6, 1997; SEC Rel. No. 34-38907 (8/14/97).
      Amended by SR-NASD-91-49 eff. Jan. 2, 1992; Oct. 1, 1993.
      Amended by SR-NASD-90-62 eff. May 7, 1991.
      Amended by SR-NASD-91-09 eff. Apr. 26, 1991.
      Amended eff. May 10, 1989.

      Selected Notices: 93-37, 93-63, 94-54, 08-57.

    • 10331. Incorporation by Reference

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      This Code shall be deemed a part of and incorporated by reference in every agreement to arbitrate under NASD or FINRA rules including a duly executed Submission Agreement.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended eff. May 7, 1991.

      Selected Notice: 08-57.

    • 10332. Schedule of Fees for Customer Disputes

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) At the time of filing a Claim, Counterclaim, Third-Party Claim or Cross-Claim, a party shall pay a non-refundable filing fee and shall remit a hearing session deposit to FINRA in the amounts indicated in the schedules below unless such fee or deposit is specifically waived by the Director of Arbitration.
      Where multiple hearing sessions are required, the arbitrators may require any of the parties to make additional hearing deposits for each additional hearing session. In no event shall the amount deposited by all parties per hearing session exceed the amount of the largest initial hearing deposit made by any party under the schedules below.
      (b) A hearing session is any meeting between the parties and the arbitrator(s), including a pre-hearing conference with an arbitrator, which lasts four (4) hours or less. The forum fee for a pre-hearing conference with an arbitrator shall be the amount set forth in the schedules below as a hearing session deposit for a hearing with a single arbitrator.
      (c) The arbitrators, in their awards, shall determine the amount chargeable to the parties as forum fees and shall determine who shall pay such forum fees. Forum fees chargeable to the parties shall be assessed on a per hearing session basis, and the aggregate for each hearing session may equal but shall not exceed the amount of the largest initial hearing deposit deposited by any party, except in a case where claims have been joined subsequent to filing in which case hearing session fees shall be computed as provided in paragraph (d). The arbitrator(s) may determine in the award that a party shall reimburse to another party any non-refundable filing fee it has paid. If a customer is assessed forum fees in connection with an industry claim, forum fees assessed against the customer shall be based on the hearing deposit required under the industry claims schedule for the amount awarded to industry parties to be paid by the customer and not based on the size of the industry claim. No fees shall be assessed against a customer in connection with an industry claim that is dismissed; however, in cases where there is also a customer claim, the customer may be assessed forum fees based on the customer claim under the procedure set out above. Amounts deposited by a party shall be applied against forum fees, if any. In addition to forum fees, the arbitrator(s) may determine in the award the amount of costs incurred pursuant to Rules 10319, 10321, 10322, and 10326 and, unless applicable law directs otherwise, other costs and expenses of the parties and arbitrator(s) which are within the scope of the agreement of the parties. The arbitrator(s) shall determine by whom such costs shall be borne. If the hearing session fees are not assessed against a party who had made a hearing deposit, the hearing deposit will be refunded unless the arbitrators determine otherwise.
      (d) For claims filed separately which are subsequently joined or consolidated under Rule 10314(d), the hearing deposit and forum fees assessable per hearing session after joinder or consolidation shall be based on the cumulative amount in dispute. The arbitrator(s) shall determine by whom such fees shall be borne.
      (e) If the dispute, claim, or controversy does not involve, disclose, or specify a money claim, the non-refundable filing fee for a public customer shall be $250 and the non-refundable filing fee for an industry party shall be $500. The hearing session deposit to be remitted by a party shall be $1000 or such greater or lesser amount as the Director of Arbitration or the panel of arbitrators may require, but shall not exceed the maximum amount specified in the schedule.
      (f) FINRA shall retain the total initial amount deposited as hearing session deposits by all the parties in any matter submitted and settled or withdrawn within eight business days of the first scheduled hearing session other than a pre-hearing conference.
      (g) Any matter submitted and thereafter settled or withdrawn subsequent to the commencement of the first hearing session, including a pre-hearing conference with an arbitrator, shall be subject to an assessment of forum fees and costs incurred pursuant to Rules 10319, 10321, 10322, and 10326 based on hearing sessions held and scheduled within eight business days after FINRA receives notice that the matter has been settled or withdrawn. The arbitrator(s) shall determine by whom such forum fees and costs shall be borne.
      (h) Reserved
      (i) Reserved
      (j) Reserved
      (k) Schedule of Fees
      For purposes of the schedule of fees, the term "claim" includes Claims, Counterclaims, Third-Party Claims, and Cross-Claims. Any such claim made by a customer or associated person is treated as a customer claim for purposes of the schedule of fees. Any such claim made by a member is an industry claim.

      Customer or Associated Person Claimant

       

      Hearing Session Deposit

      Amount in Dispute (Exclusive of Interest and Expenses) Claim Filing Fee

      Deposit for Cases to be Decided on the Paper Record

      One Arbitrator1 Three Arbitrators2

      $.01–$1,000

      $ 25

      $ 25

      $ 25

      NA

      $1,000.01–$2,500

      $ 25

      $ 50

      $ 50

      NA

      $2,500.01–$5,000

      $ 50

      $ 125

      $ 125

      NA

      $5,000.01–$10,000

      $ 75

      $ 250

      $ 250

      NA

      $10,000.01–$25,000

      $125

      $ 300

      $ 450

      NA

      $25,000.01–$30,000

      $150

      NA

      $ 450

      $ 600

      $30,000.01–$50,000

      $175

      NA

      $ 450

      $ 600

      $50,000.01–$100,000

      $225

      NA

      $ 450 3

      $ 750

      $100,000.01–$500,000

      $300

      NA

      $ 450 3

      $1,125

      $500.000.01–$1,000,000

      $375

      NA

      $ 450 3

      $1,200

      $1,000,000.01–$3,000,000

      $500

      NA

      $ 450 3

      $1,200

      $3,000,000.01–$5,000,000

      $600

      NA

      $ 450 3

      $1,200

      $5,000,000.01–$10,000,000

      $600

      NA

      $ 450 3

      $1,200

      Over $10,000,000

      $600

      NA

      $ 450 3

      $1,200

      1 The dispute is resolved by one arbitrator per hearing session, including pre-hearing conferences.

      2 The dispute is resolved by three arbitrators per hearing session.

      3 Fee applies only to pre-hearing conferences with a single arbitrator.


      Member Claimant

       

      Hearing Session Deposit

      Amount in Dispute (Exclusive of Interest and Expenses) Claim Filing Fee Deposit for Cases to be Decided on the Paper Record One Arbitrator1 Three Arbitrators2

      $.01–$1,000

      $ 200

      $ 25

      $ 25

      NA

      $1,000.01–$2,500

      $ 300

      $ 50

      $ 50

      NA

      $2,500.01–$5,000

      $ 400

      $ 125

      $ 125

      NA

      $5,000.01–$10,000

      $ 500

      $ 250

      $ 250

      NA

      $10,000.01–$25,000

      $ 750

      $ 300

      $ 450

      NA

      $25,000.01–$30,000

      $1,000

      NA

      $ 450

      $ 600

      $30,000.01–$50,000

      $1,000

      NA

      $ 450

      $ 600

      $50,000.01–$100,000

      $1,000

      NA

      $ 450 3

      $ 750

      $100,000.01–$500,000

      $1,000

      NA

      $ 450 3

      $1,125

      $500.000.01–$1,000,000

      $1,250

      NA

      $ 450 3

      $1,200

      $1,000,000.01–$5,000,000

      $2,000

      NA

      $ 450 3

      $1,200

      $5,000,000.01–$10,000,000

      $2,500

      NA

      $ 450 3

      $1,200

      Over $10,000,000

      $5,000

      NA

      $ 4503

      $1,200

      1 The dispute is resolved by one arbitrator per hearing session, including pre-hearing conferences.

      2 The dispute is resolved by three arbitrators per hearing session.

      3 Fee applies only to pre-hearing conferences with a single arbitrator.

      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2000-65 eff. Dec. 31, 2000.
      Amended by SR-NASD-2000-11 eff. Nov. 1, 2000.
      Amended by SR-NASD-99-23 eff. March 18, 1999.
      Amended by SR-NASD-97-79 eff. March 18, 1999.
      Amended by SR-NASD-95-25 eff. Aug. 1, 1995.
      Amended by SR-NASD-94-10 eff. May 2, 1995.
      Amended by SR-NASD-94-75 eff. Jan. 1, 1995.
      Amended by SR-NASD-90-03 eff. June 18, 1990.
      Amended eff. Oct. 1, 1984; July 1, 1987; Apr. 1, 1988; May 10, 1989; June 1, 1990.

      Selected Notices: 99-23, 08-57.

    • 10333. Member Surcharge and Process Fees

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Member Surcharge
      (1) Each member that is named as a party to an arbitration proceeding, whether in a Claim, Counterclaim, Cross-Claim or Third-Party Claim, shall be assessed a surcharge pursuant to the schedule below when the Director of Arbitration perfects service of the claim naming the member on any party to the proceeding.
      (2) For each associated person who is named, the surcharge shall be assessed against the member or members that employed the associated person at the time of the events which gave rise to the dispute, claim or controversy. No member shall be assessed more than a single surcharge in any arbitration proceeding.
      (3) The surcharge shall not be chargeable to any other party under Rules 10332(c) and 10205(c) of the Code. The Director will refund the surcharge paid by a member in an arbitration filed by a customer if the arbitration panel: (A) denies all of the customer's claims against the member or associated person; and (B) allocates all forum fees assessed pursuant to Rule 10332(c) against the customer. The Director may also refund or cancel the member surcharge in extraordinary circumstances.

      Member Surcharge Schedule

      Amount in Dispute

       

      $.01–$2,500

      $150

      $2,500.01–$5,000

      $200

      $5,000.01–$10,000

      $325

      $10,000.01–$25,000

      $425

      $25,000.01–$30,000

      $600

      $30,000.01–$50,000

      $875

      $50,000.01–$100,000

      $1,100

      $100,000.01–$500,000

      $1,700

      $500,000.01–$1,000,000

      $2,250

      $1,000,000.01–$5,000,000

      $2,800

      $5,000,000.01–$10,000,000

      $3,350

      Over $10,000,000

      $3,750

      (4) For purposes of this Rule, service is perfected when the Director of Arbitration properly serves the Respondents to such proceeding under Rule 10314 of the Code.
      (5) If the dispute, claim, or controversy does not involve, disclose, or specify a money claim, the non-refundable surcharge shall be $1,500 or such greater or lesser amount as the Director of Arbitration or the panel of arbitrators may require, but shall not exceed the maximum amount specified in the schedule.
      (b) Prehearing and Hearing Process Fees
      (1) Each member that is a party to an arbitration proceeding in which more than $25,000 is in dispute will pay:
      (A) a non-refundable prehearing process fee of $750, due at the time the parties are sent arbitrator lists in accordance with Rule 10308(b)(5); and
      (B) a non-refundable hearing process fee, due when the parties are notified of the date and location of the first hearing session, as set forth in the schedule below.
      (2) If an associated person of a member is a party, the member that employed the associated person at the time of the events which gave rise to the dispute, claim or controversy will be charged the process fees, even if the member is not a party. No member shall be assessed more than one prehearing and one hearing process fee in any arbitration proceeding.
      (3) The prehearing and hearing process fees shall not be chargeable to any other party under Rules 10332(c) and 10205(c) of the Code.

      Hearing Process Fee Schedule

      Damages Requested

      Hearing Process Fee

       

      $1–$25,000

      $ 0

      $25,000.01–$50,000

      $ 1,000

      $50,000.01–$100,000

      $ 1,700

      $100,000.01–$500,000

      $ 2,750

      $500,000.01–$1,000,000

      $ 4,000

      $1,000,000.01–$5,000,000

      $ 5,000

      More than $5,000,000

      $ 5,500

      Unspecified

      $ 2,200

      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2003-01 eff. Jan. 13, 2003.
      Amended by SR-NASD-2001-62 eff. Nov. 19, 2001.
      Amended by SR-NASD-98-93 eff. Dec. 11, 1998.
      Amended by SR-NASD-97-96 eff. Jan. 2, 1998.
      Amended by SR-NASD-97-88 eff. Dec. 11, 1997.
      Amended by SR-NASD-97-40 eff. July 1, 1997.
      Amended by SR-NASD-94-74 eff. Dec. 28, 1994.
      Amended by SR-NASD-94-16 eff. Mar. 31, 1994.
      Added by SR-NASD-94-11 eff. Feb. 25, 1994.

      Selected Notices: 87-55, 88-14, 90-47, 94-26, 95-1, 98-1, 01-70, 03-06, 08-57.

    • 10334. Direct Communication Between Parties and Arbitrators

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) This rule provides procedures under which parties and arbitrators may communicate directly.
      (b) Only parties that are represented by counsel may use direct communication under this Rule. If, during the proceeding, a party chooses to appear pro se (without counsel), this Rule shall no longer apply.
      (c) All arbitrators and all parties must agree to the use of direct communication during the Initial Prehearing Conference or a later conference or hearing before it can be used.
      (d) Parties may send the arbitrators only items that are listed in an order.
      (e) Parties may send items by regular mail, overnight courier, facsimile, or email. All the arbitrators and parties must have facsimile or email capability before such a delivery method may be used.
      (f) Copies of all materials sent to arbitrators must also be sent at the same time and in the same manner to all parties and the Director. Materials that exceed 15 pages, however, shall be sent to the Director only by regular mail or overnight courier.
      (g) The Director must receive copies of any orders and decisions made as a result of direct communications among the parties and the arbitrators.
      (h) Parties may not communicate orally with any of the arbitrators outside the presence of all parties.
      (i) Any party or arbitrator may terminate the direct communication order at any time, after giving written notice to the other arbitrators and the parties.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2003-163 eff. Sept. 30, 2004.

      Selected Notices: 04-62, 08-57.

    • 10335. Temporary Injunctive Orders; Requests for Permanent Injunctive Relief

      This Code was superseded by the Customer Code (Rule 12000 Series) and the Industry Code (Rule 13000 Series) on April 16, 2007, for claims filed on or after that date. The Code remains in effect, however, for cases filed before April 16, 2007.

      (a) Temporary Injunctive Orders
      (1) In industry or clearing disputes required to be submitted to arbitration pursuant to Rule 10201, parties may seek a temporary injunctive order, as defined in paragraph (a)(2) of this Rule, from a court of competent jurisdiction. Parties to a pending arbitration may seek a temporary injunctive order from a court of competent jurisdiction even if another party has already filed a claim arising from the same dispute in arbitration pursuant to this paragraph, provided that an arbitration hearing on a request for permanent injunctive relief pursuant to paragraph (b) of this Rule has not yet begun.
      (2) For purposes of this Rule, temporary injunctive order means a temporary restraining order, preliminary injunction or other form of initial, temporary injunctive relief.
      (3) A party seeking a temporary injunctive order from a court with respect to an industry or clearing dispute required to be submitted to arbitration pursuant to Rule 10201 shall simultaneously file with the Director a Statement of Claim requesting permanent injunctive and all other relief with respect to the same dispute in the manner specified under this Code. The party seeking temporary injunctive relief shall also serve the Statement of Claim requesting permanent injunctive and all other relief on all other parties in the same manner and at the same time as the Statement of Claim is filed with the Director. Filings and service under this Rule shall be made by facsimile, overnight delivery service or messenger. Service shall be made on all parties at the same time and in the same manner, unless the parties agree otherwise. A party obtaining a court-issued temporary injunctive order shall notify the Director and the other parties of the issuance of the order within one business day.
      (4) Unless otherwise stated, for purposes of computation of time under any paragraph of this Rule, any reference to days means calendar days, including Saturdays, Sundays or any FINRA holiday. However, if a party must provide notice or a response to the Director and the day on which that notice or response to the Director must be given falls on a Saturday, Sunday or any FINRA holiday, then the time period is extended until the next business day.
      (b) Hearing on Request for Permanent Injunctive Relief
      (1) Scheduling of Hearing
      If a court issues a temporary injunctive order, an arbitration hearing on the request for permanent injunctive relief shall begin within 15 days of the date the court issues the temporary injunctive order. If the 15th day falls on a Saturday, Sunday, or FINRA holiday, the 15-day period shall expire on the next business day. Unless the parties agree otherwise, a hearing lasting more than one day shall be held on consecutive days when reasonably possible. The Director shall provide to all parties notice of the date, time and place of the hearing at least three days prior to the beginning of the hearing.
      (2) Composition of Arbitration Panel
      The hearing on the request for permanent injunctive relief shall be heard by a panel of three arbitrators, who shall either be all non-public arbitrators as defined in Rule 10308(a)(4), or, if the underlying dispute would be heard by a public arbitrator or panel consisting of a majority of public arbitrators under Rule 10202, a majority of public arbitrators as defined in Rule 10308(a)(5).
      (3) Selection of Arbitrators and Chairperson
      (A)(i) In cases in which all of the members of the arbitration panel are non-public under paragraph (b)(2) of this Rule, the Director shall generate and provide to the parties a list of seven arbitrators from a national roster of arbitrators. The Director shall send to the parties the employment history for the past 10 years for each listed arbitrator and other background information. At least three of the arbitrators listed shall be lawyers with experience litigating cases involving injunctive relief.
      (ii) Each party may exercise one strike to the arbitrators on the list. Within three days of receiving the list, each party shall inform the Director which arbitrator, if any, it wishes to strike, and shall rank the remaining arbitrators in order of preference. The Direct shall consolidate the parties' rankings, and shall appoint arbitrators based on the order of rankings on the consolidated list, subject to the arbitrators' availability and disqualification.
      (B)(i) In cases in which the panel of arbitrators consists of a majority of public arbitrators under paragraph (b)(2) of this Rule, the Director shall generate and provide to the parties a list of nine arbitrators from a national roster of arbitrators. The Director shall send to the parties employment history for the past 10 years for each listed arbitrator and other background information. At least a majority of the arbitrators listed shall be public arbitrators, and at least four of the arbitrators listed shall be lawyers with experience litigating cases involving injunctive relief.
      (ii) Each party may exercise two strikes to the arbitrators on the list. Within three days of receiving the list, each party shall inform the Director which arbitrators, if any, it wishes to strike, and shall rank the remaining arbitrators in order of preference. The Director shall consolidate the parties' rankings, and shall appoint arbitrators based on the order of rankings on the consolidated list, subject to the arbitrators' availability and disqualification.
      (C)(i) Each party shall inform the Director of its preference of chairperson of the arbitration panel by the close of business on the next business day after receiving notice of the panel members.
      (ii) If the parties do not agree on a chairperson within that time, the Director shall select the chairperson. In cases in which the panel consists of a majority of public arbitrators, the Director shall select a public arbitrator as chairperson. Whenever possible, the Director shall select as chairperson the lawyer with experience litigating cases involving injunctive relief whom the parties have ranked the highest.
      (D) The Director may exercise discretionary authority and make any decision that is consistent with the purposes of this Rule and Rule 10308 to facilitate the appointment of arbitration panels and the selection of chairperson.
      (4) Applicable Legal Standard
      The legal standard for granting or denying a request for permanent injunctive relief is that of the state where the events upon which the request is based occurred, or as specified in an enforceable choice of law agreement between the parties.
      (5) Effect of Pending Temporary Injunctive Order
      Upon a full and fair presentation of the evidence from all relevant parties on the request for permanent injunctive relief, the panel may prohibit the parties from seeking an extension of any court-issued temporary injunctive order remaining in effect, or, if appropriate, order the parties jointly to move to modify or dissolve any such order. In the event that a panel's order conflicts with a pending court order, the panel's order will become effective upon expiration of the pending court order.
      (6) Fees, Costs and Expenses, and Arbitrator Honorarium
      (A) The parties shall jointly bear reasonable travel-related costs and expenses incurred by arbitrators who are required to travel to a hearing location other than their primary hearing location(s) in order to participate in the hearing on the request for permanent injunctive relief. The arbitrators may reallocate such costs and expenses among the parties in the award.
      (B) The party seeking injunctive relief shall pay the expedited hearing fees pursuant to Rule 10205(h), or, where both sides seek such relief, both parties shall pay such fees. In either event, however, the arbitrators may reallocate such fees among the parties in the award.
      (C) Notwithstanding any other provision in the Code, the chairperson of the panel hearing a request for permanent injunctive relief pursuant to this Rule shall receive an honorarium of $375 for each single session, and $700 for each double session, of the hearing. Each other member of the panel shall receive an honorarium of $300 for each single session, and $600 for each double session, of the hearing. The parties shall equally pay the difference between these amounts and the amounts panel members and the chairperson receive under the Code pursuant to IM-10104. The arbitrators may reallocate such amount among the parties in the award.
      (c) Hearing on Damages or other Relief
      (1) Upon completion of the hearing on the request for permanent relief, the panel, may, if necessary, set a date for any subsequent hearing on damages or other relief, which shall be held before the same panel of arbitrators and which shall include, but not be limited to, the same record.
      (2) The parties shall jointly bear reasonable travel-related costs and expenses incurred by arbitrators who are required to travel to a hearing location other than their primary hearing location(s) in order to participate in any subsequent hearings on damages or other relief. The arbitrators may reallocate such costs and expenses among the parties in the award.
      (d) Effective Date
      This Rule shall apply to arbitration claims filed on or after March 25, 2002. Except as otherwise provided in this Rule, the remaining provisions of the Code shall apply to proceedings instituted under this Rule.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2000-02 eff. March 25, 2002.
      Amended by SR-NASD-2001-89 eff. Dec. 18, 2001 (extending expiration date).
      Amended by SR-NASD-2000-75 eff. Jan. 5, 2001.
      Amended by SR-NASD-99-72 eff. Dec. 28, 1999.
      Amended by SR-NASD-99-27 eff. June 16, 1999.
      Amended by SR-NASD-98-97 eff. Dec. 28, 1998.
      Amended by SR-NASD-98-42 eff. June 24, 1998.
      Amended by SR-NASD-97-87 eff. Jan. 3, 1998.
      Amended by SR-NASD-96-44 eff. Dec. 20, 1996.
      Adopted by SR-NASD-93-38 eff. Jan. 3, 1996.

      Selected Notices: 95-83, 02-13, 08-57.