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  • PART II GENERAL ARBITRATION RULES

    • 13200. Required Arbitration

      (a) Generally
      Except as otherwise provided in the Code, a dispute must be arbitrated under the Code if the dispute arises out of the business activities of a member or an associated person and is between or among:
      •  Members;
      •  Members and Associated Persons; or
      •  Associated Persons.
      (b) Insurance Activities
      Disputes arising out of the insurance business activities of a member that is also an insurance company are not required to be arbitrated under the Code.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57.

    • 13201. Statutory Employment Discrimination Claims and Disputes Arising Under a Whistleblower Statute that Prohibits the Use of Predispute Arbitration Agreements

      (a) Statutory Employment Discrimination Claims
      A claim alleging employment discrimination, including sexual harassment, in violation of a statute, is not required to be arbitrated under the Code. Such a claim may be arbitrated only if the parties have agreed to arbitrate it, either before or after the dispute arose. If the parties agree to arbitrate such a claim, the claim will be administered under Rule 13802.
      (b) Disputes Arising Under a Whistleblower Statute that Prohibits the Use of Predispute Arbitration Agreements
      A dispute arising under a whistleblower statute that prohibits the use of predispute arbitration agreements is not required to be arbitrated under the Code. Such a dispute may be arbitrated only if the parties have agreed to arbitrate it after the dispute arose.
      Amended by SR-FINRA-2011-067 eff. May 21, 2012.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57, 12-21.

    • 13202. Claims Involving Registered Clearing Agencies

      If a registered clearing agency has entered into an agreement to use FINRA's arbitration facilities and procedures, any dispute, claim or controversy involving that registered clearing agency, or participants, pledges or other persons using the facilities of the registered clearing agency will be arbitrated in accordance with such agreement and the rules of the registered clearing agency.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57.

    • 13203. Denial of FINRA Forum

      (a) The Director may decline to permit the use of the FINRA arbitration forum if the Director determines that, given the purposes of FINRA and the intent of the Code, the subject matter of the dispute is inappropriate, or that accepting the matter would pose a risk to the health or safety of arbitrators, staff, or parties or their representatives. Only the Director may exercise the authority under this Rule.
      (b) Disputes that arise out of transactions in a readily identifiable market may be referred to the arbitration forum for that market, if the claimant agrees.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57, 16-04.

    • 13204. Class Action and Collective Action Claims

      (a) Class Actions
      (1) Class action claims may not be arbitrated under the Code.
      (2) Any claim that is based upon the same facts and law, and involves the same defendants as in a court-certified class action or a putative class action, or that is ordered by a court for class-wide arbitration at a forum not sponsored by a self-regulatory organization, shall not be arbitrated under the Code, unless the party bringing the claim files with FINRA one of the following:
      (A) a copy of a notice filed with the court in which the class action is pending that the party will not participate in the class action or in any recovery that may result from the class action, or has withdrawn from the class according to any conditions set by the court; or
      (B) a notice that the party will not participate in the class action or in any recovery that may result from the class action.
      (3) The Director will refer to a panel any dispute as to whether a claim is part of a class action, unless a party asks the court hearing the class action to resolve the dispute within 10 days of receiving notice that the Director has decided to refer the dispute to a panel.
      (4) A member or associated person may not enforce any arbitration agreement against a member of a certified or putative class action with respect to any claim that is the subject of the certified or putative class action until:
      •  The class certification is denied;
      •  The class is decertified;
      •  The member of the certified or putative class is excluded from the class by the court; or
      •  The member of the certified or putative class elects not to participate in the class or withdraws from the class according to conditions set by the court, if any.
      (b) Collective Actions
      (1) Collective action claims under the Fair Labor Standards Act, the Age Discrimination in Employment Act, or the Equal Pay Act of 1963 may not be arbitrated under the Code.
      (2) Any claim that involves plaintiffs who are similarly-situated against the same defendants as in a court-certified collective action or a putative collective action, or that is ordered by a court for collective action at a forum not sponsored by a self-regulatory organization, shall not be arbitrated under the Code, if the party bringing the claim has opted-in to the collective action.
      (3) The Director will refer to a panel any dispute as to whether a claim is part of a collective action, unless a party asks the court or other forum hearing the collective action to resolve the dispute within 10 days of receiving notice that the Director has decided to refer the dispute to a panel.
      (4) A member or associated person may not enforce an agreement to arbitrate in this forum against a member of a certified or putative collective action with respect to any claim that is the subject of the certified or putative collective action until the collective action certification is denied or the collective action is decertified.
      These subparagraphs do not otherwise affect the enforceability of any rights under the Code or any other agreement.
      Amended by SR-FINRA-2012-027 eff. July 9, 2012.
      Amended by SR-FINRA-2011-075 eff. July 9, 2012.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57, 12-28.

    • 13205. Shareholder Derivative Actions

      Shareholder derivative actions may not be arbitrated under the Code.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57.

    • 13206. Time Limits

      (a) Time Limitation on Submission of Claims
      No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim. The panel will resolve any questions regarding the eligibility of a claim under this rule.
      (b) Dismissal under Rule
      Dismissal of a claim under this rule does not prohibit a party from pursuing the claim in court. By filing a motion to dismiss a claim under this rule, the moving party agrees that if the panel dismisses a claim under this rule, the non-moving party may withdraw any remaining related claims without prejudice and may pursue all of the claims in court.
      (1) Motions under this rule must be made in writing, and must be filed separately from the answer, and only after the answer is filed.
      (2) Unless the parties agree or the panel determines otherwise, parties must serve motions under this rule at least 90 days before a scheduled hearing, and parties have 30 days to respond to the motion. Moving parties may reply to responses to motions. Any such reply must be made within 5 days of receipt of a response.
      (3) Motions under this rule will be decided by the full panel.
      (4) The panel may not grant a motion under this rule unless an in-person or telephonic prehearing conference on the motion is held or waived by the parties. Prehearing conferences to consider motions under this rule will be recorded as set forth in Rule 13606.
      (5) If the panel grants a motion under this rule (in whole or part), the decision must be unanimous, and must be accompanied by a written explanation.
      (6) If the panel denies a motion under this rule, a party may not re-file the denied motion, unless specifically permitted by panel order.
      (7) If the party moves to dismiss on multiple grounds including eligibility, the panel must decide eligibility first.
      •  If the panel grants the motion to dismiss the case on eligibility grounds on all claims, it shall not rule on any other grounds for the motion to dismiss.
      •  If the panel grants the motion to dismiss on eligibility grounds on some, but not all claims, and the party against whom the motion was granted elects to move the case to court, the panel shall not rule on any other ground for dismissal for 15 days from the date of service of the panel's decision to grant the motion to dismiss on eligibility grounds.
      •  If a panel dismisses any claim on eligibility grounds, the panel must record the dismissal on eligibility grounds on the face of its order and any subsequent award the panel may issue.
      •  If the panel denies the motion to dismiss on eligibility grounds, it shall rule on the other bases for the motion to dismiss the remaining claims in accordance with the procedures set forth in Rule 13504(a).
      (8) If the panel denies a motion under this rule, the panel must assess forum fees associated with hearings on the motion against the moving party.
      (9) If the panel deems frivolous a motion filed under this rule, the panel must also award reasonable costs and attorneys' fees to any party that opposed the motion.
      (10) The panel also may issue other sanctions under Rule 13212 if it determines that a party filed a motion under this rule in bad faith.
      (c) Effect of Rule on Time Limits for Filing Claim in Court
      The rule does 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. However, when a claimant files a statement of claim in arbitration, any time limits for the filing of the claim in court will be tolled while FINRA retains jurisdiction of the claim.
      (d) Effect of Filing a Claim in Court on Time Limits for Filing in Arbitration
      If a party submits a claim to a court of competent jurisdiction, the six-year time limitation will not run while the court retains jurisdiction of the claim matter.
      Amended by SR-FINRA-2011-006 eff. June 6, 2011.
      Amended by SR-FINRA-2009-013 eff. Aug. 10, 2009.
      Amended by SR-FINRA-2007-021 eff. Feb. 23, 2009.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2007-026 eff. April 16, 2007.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57, 09-07, 09-36, 11-23.

    • 13207. Extension of Deadlines

      (a) The parties may agree in writing to extend or modify any deadline for:
      •  Serving an answer;
      •  Returning arbitrator or chairperson lists;
      •  Responding to motions; or
      •  Exchanging documents or witness lists.
      If the parties agree to extend or modify a deadline under this rule, they must notify the Director of the new deadline in writing.
      (b) The panel may extend or modify any deadline listed in paragraph (a), or any other deadline set by the panel, either on its own initiative or upon motion of a party.
      (c) The Director may extend or modify any deadline or time period set by the Code for good cause. The Director may also extend or modify any deadline or time period set by the panel in extraordinary circumstances.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57.

    • 13208. Representation of Parties

      (a) Representation by a Party
      Parties may represent themselves in an arbitration held in a United States hearing location. A member of a partnership may represent the partnership; and a bona fide officer of a corporation, trust, or association may represent the corporation, trust, or association.
      (b) Representation by an Attorney
      At any stage of an arbitration proceeding held in a United States hearing location, all parties shall have the right to be represented by an attorney at law in good standing and admitted to practice before the Supreme Court of the United States or the highest court of any state of the United States, the District of Columbia, or any commonwealth, territory, or possession of the United States, unless state law prohibits such representation.
      (c) Representation by Others
      Parties may be represented in an arbitration by a person who is not an attorney, unless:
      •  state law prohibits such representation, or
      •   the person is currently suspended or barred from the securities industry in any capacity, or
      •   the person is currently suspended from the practice of law or disbarred.
      (d) Qualifications of Representative
      Issues regarding the qualifications of a person to represent a party in arbitration are governed by applicable law and may be determined by an appropriate court or other regulatory agency. In the absence of a court order, the arbitration proceeding shall not be stayed or otherwise delayed pending resolution of such issues.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2006-109 eff. Dec. 24, 2007.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 07-57, 08-57.

    • 13209. Legal Proceedings

      During an arbitration, no party may bring any suit, legal action, or proceeding against any other party that concerns or that would resolve any of the matters raised in the arbitration.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57.

    • 13210. Ex Parte Communications

      (a) Except as provided in Rule 13211, no party, or anyone acting on behalf of a party, may communicate with any arbitrator outside of a scheduled hearing or conference regarding an arbitration unless all parties or their representatives are present.
      (b) No party, or anyone acting on behalf of a party, may send or give any written motion, request, submission or other materials directly to any arbitrator, unless the arbitrators and the parties agree, or the Code provides otherwise.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57.

    • 13211. Direct Communication Between Parties and Arbitrators

      (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 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 to the arbitrators by first-class mail, overnight mail service, overnight delivery service, hand delivery, email, or facsimile as specified in the Direct Communication Order. 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 served on all parties and filed with the Director, pursuant to Rule 13300.
      (g) The parties must file with the Director, pursuant to Rule 13300, 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-2016-029 eff. April 3, 2017.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notices: 07-07, 08-57, 17-03.

    • 13212. Sanctions

      (a) The panel may sanction a party for failure to comply with any provision in the Code, or any order of the panel or single arbitrator authorized to act on behalf of the panel. Unless prohibited by applicable law, sanctions may include, but are not limited to:
      •  Assessing monetary penalties payable to one or more parties;
      •  Precluding a party from presenting evidence;
      •  Making an adverse inference against a party;
      •  Assessing postponement and/or forum fees; and
      •  Assessing attorneys' fees, costs and expenses.
      (b) The panel may initiate a disciplinary referral at the conclusion of an arbitration.
      (c) The panel may dismiss a claim, defense or arbitration with prejudice as a sanction for material and intentional failure to comply with an order of the panel if prior warnings or sanctions have proven ineffective.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57.

    • 13213. Hearing Locations

      (a) U.S. Hearing Location
      (1) The Director will decide which of FINRA's hearing locations will be the hearing location for the arbitration. In cases involving an associated person, the Director will generally select the hearing location closest to where the associated person was employed at the time of the events giving rise to the dispute, unless the hearing location closest to the associated person's employment is in a different state, in which case the associated person may request a hearing location in his or her state of employment at the time of the events giving rise to the dispute. In cases involving members only or more than one associated person, the Director will consider a variety of factors, including:
      •  The parties' signed agreement to arbitrate, if any;
      •  Which party initiated the transaction or business in issue; and
      •  The location of essential witnesses and documents.
      (2) Before arbitrator lists are sent to the parties under Rule 13403, the parties may agree in writing to a hearing location other than the one selected by the Director.
      (3) The Director may change the hearing location upon motion of a party, as set forth in Rule 13503.
      (4) After the panel is appointed, the panel may decide a motion relating to changing the hearing location.
      (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 Rule 13902(c).
      Amended by SR-FINRA-2009-073 eff. May 3, 2010.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Adopted by SR-NASD-2004-011 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57, 10-17.

    • 13214. Payment of Arbitrators

      (a) Except as provided in paragraph (b), Rule 13800, and Rule 13806(f), FINRA will pay the panel an honorarium, as follows:
      (1) $300 to each arbitrator for each hearing session in which he or she participates;
      (2) an additional $125 per day to the chairperson for each hearing on the merits;
      (3) $50 to each arbitrator for travel to a hearing session that is postponed pursuant to Rule 13601;
      (4) $600 to each arbitrator if a hearing session other than a prehearing conference is postponed within 10 days before a scheduled hearing session pursuant to Rules 13601(a)(2) and (b)(2); and
      (5) $100 to each arbitrator scheduled to attend a prehearing conference that is cancelled within three business days of the prehearing conference by agreement of the parties or is requested by one or more parties within three business days of the prehearing conference and granted, pursuant to Rules 13500(d) and 13501(d).
      (b) The Director may authorize a higher or additional honorarium for the use of a foreign hearing location.
      (c) Payment for Deciding Discovery-Related Motions, Contested Subpoena Requests, and Contested Orders for Production or Appearance without a Hearing Session
      (1) FINRA will pay each arbitrator an honorarium of $200 to decide without a hearing session: (i) a discovery-related motion, (ii) a motion that contains one or more contested subpoena requests or contested orders for production or appearance; or (iii) a motion that contains one or more contested subpoena requests and contested orders for production or appearance. This paragraph does not apply to cases administered under Rule 13800 or pursuant to Rule 13806(d)(1).
      (2) For purposes of paragraph (c)(1):
      i. a discovery-related motion and any replies or other correspondence relating to the motion shall be considered to be a single motion;
      ii. a contested motion requesting the issuance of one or more subpoenas shall include the motion, the draft subpoena(s), a written objection from the party opposing the motion, and any other documents supporting a party's position; and
      iii. a contested motion requesting the issuance of one or more orders for production or appearance shall include the motion, the draft order(s), a written objection from the party opposing the motion, and any other documents supporting a party's position.
      (3) The panel will allocate the cost of the honoraria under paragraph (c)(1) to the parties pursuant to Rule 13902(c).
      (d) Payment for Explained Decisions
      (1) The chairperson who is responsible for writing an explained decision pursuant to Rule 13904(g) will receive an additional honorarium of $400.
      (2) If the panel decides on its own to write an explained decision, then no panel member will receive the additional honorarium of $400.
      Amended by SR-FINRA-2018-026 eff. Jan. 7, 2019.
      Amended by SR-FINRA-2018-019 eff. Oct. 29, 2018.
      Amended by SR-FINRA-2018-012 eff. Feb. 21, 2018.
      Amended by SR-FINRA-2015-003 eff. July 6, 2015.
      Amended by SR-FINRA-2014-026 eff. Dec 15, 2014.
      Amended by SR-FINRA-2009-015 eff. Sep. 14, 2009.
      Amended by SR-FINRA-2008-051 eff. Apr. 13, 2009.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Paragraph (d) Adopted by SR-NASD-2006-101 eff. April 2, 2007.
      Paragraphs (a) through (c) adopted by SR-NASD-2003-158 eff. April 16, 2007.

      Selected Notice: 07-07, 08-57, 09-16, 09-48, 14-49, 15-21, 18-33, 18-40.