June 24, 2014
The proposed requirement for redaction of Personal Confidential Information (PCI) from certain documents, while providing exceptions for this requirement in some proceedings involving simplified arbitration is an attempt to balance maintaining securities customer privacy with minimizing the burden of necessary filings with FINRA. The redaction requirement is, in effect, another transaction cost of pursuing a FINRA claim.
As such, there should be a record of how many FINRA proceedings or claims are affected by the requirement or any consequences of failure to comply with the requirement. The SEC should therefore require FINRA to detail in some kind of annual report, the number of occasions the redaction requirement has been invoked in a FINRA claim proceeding, including the number of claims which may have been denied, modified, or unresolved because of some failure to comply with redaction. If there are multiple, say 20 or more, cases annually in which a FINRA claim has been adjudicated, affected or denied by the redaction requirement, then the SEC may wish to review this requirement. Such a report might be required only for a limited period, for example, for three years after implementation of the PCI redaction requirement, just to insure that the requirement itself does not become a barrier to FINRA adjudication of claims against security industry members. So perhaps FINRA could commit to collating and reporting on an annual basis for three years after adoption the number of FINRA proceedings in which non-compliance with redaction was applied, and the results of the remedy, if any for non-compliance.