May 15, 2018
The purpose of this letter is to provide the Securities and Exchange Commission with comments on the above referenced proposed rule change which was filed by the Financial Industry Regulatory Authority, Inc. (FINRA) on May 4, 2018.
I am an attorney whose practice is exclusively devoted to the representation of individual and institutional investors in their disputes with the securities industry. Moreover, I am the current Chairman of FINRAs National Arbitration and Mediation Committee (NAMC) and a public member of the NAMC the former Chairman of FINRAs Discovery Task Force Committee (DTFC) a former member of the Securities Investor Protection Corporation (SIPC) Modernization Task Force and a former President and current Director Emeritus of the Public Investors Arbitration Bar Association (PIABA).
It is my understanding that the proposed amendments would amend FINRA Rules 12500, 12501 and 12214(a) of the Code of Arbitration Procedure for Customer Disputes (Customer Code) and FINRA Rules 13500, 13501 and 13214(a) of the Code of Arbitration Procedure for Industry Disputes (Industry Code) so as to impose a $100 per-arbitrator fee to parties who request cancellation of a prehearing conference within three business days before a scheduled prehearing conference and to create a $100 honorarium to pay each arbitrator scheduled to attend a prehearing conference that was cancelled within three business days of the prehearing conference.
It is my opinion that the proposed amendments would be a fair, equitable and reasonable approach which recognizes the considerable preparation by arbitrators, and significant logistical work by FINRA staff, that is required prior to a prehearing conference.
As noted in the rule filing, and as I can attest to based on my own personal experiences, these late cancellations often result in scheduling inconvenience for arbitrators, uncompensated work by arbitrators and an operational challenge for FINRA staff who must quickly notify other parties and the arbitrator or panel about the cancellation.
At the same time, and of equal importance, is the proposed creation of a $100 honorarium for each arbitrator scheduled to attend a prehearing conference, which is cancelled within three business days of the prehearing conference, which not only recognizes that arbitrators must be properly compensated for their time, but which will also will lead to an improved and expanded roster of arbitrators.
Thank you for providing me with the opportunity to submit my comments on this rule filing.