July 11, 2013
I am writing to provide my comments to the Securities and Exchange Commission (SEC) with respect to the above-referenced proposed rule change filed by the Financial Industry Regulatory Authority, Inc. (FINRA) on June 3, 2013.
By way of background, my firms practice is heavily devoted to representing individual and institutional investors in securities arbitration and litigation. I am the current co-chairman of the AAJs Securities Litigation Group.
I appreciate the invitation by the SEC to provide comments on the above-referenced proposed rule change and wish to focus my comments on two of the proposals raised in the SECs release: E-Discovery and Product Cases.
With respect to e-discovery, I believe that the proposed revisions to the Discovery Guide are necessary to provide all parties and arbitrators with guidelines for e-discovery which has quickly become the preferred method for investors and broker-dealers alike. Educating the parties and arbitrators, on previously non-codified e-discovery topics, and party responsibilities, will assist parties in narrowing or avoiding discovery issues, as well as provide arbitrators with the resources to rule on these issues. Most brokerage firms maintain records in electronic format and can easily produce relevant records in a fast, cost-effective format, which is a goal of arbitration.
I am in favor of the proposed revisions to the Discovery Guide involving product cases. The current FINRA Discovery Guide fails to properly address these cases. Product cases involve some of the largest damage FINRA cases. Also, as Wall Street invents more alternative investments to sell to investors, the likelihood increases that investors will file multiple arbitration claims involving the same product. However, unlike the court system, FINRA does not offer a methodology to coordinate discovery amongst multiple related cases. Arbitration is meant to be faster and less expensive than court. However it should not prevent investors from obtaining meaningful documents. The new proposal is a step in a positive direction. Finally, I am in favor of guidance to arbitrators that a broker-dealer that has previously produced product case discovery in other arbitrations or in regulatory investigations or proceedings can cost effectively make these documents available in related proceedings. I believe that this guidance will help the arbitrators see past a broker-dealers objections as to the burden and cost of producing these documents.
Thank you again for providing an opportunity and forum for the public to comment on these important matters.
Scott Silver, Esq.
Silver Law Group