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SEC approves change to FINRA arbitrator appointment process

The SEC approved a FINRA rule proposal which simplifies the way investors select arbitrators in disputes with their brokerage firms.  Arbitrations, rather than court proceedings, are mandatory in disputes between investors and their brokers, who are regulated by FINRA — the Financial Industry Regulatory Authority. Clients and brokers have some options to chose the arbitrators from a pool of panelists with industry experience, or the general public.

Under the new rules, customers wouldn’t have to first decide whether they want an all-public panel, or one with public and industry arbitrators. Instead, the parties can directly choose from a list of public and non-public arbitrators without deciding first which methodology to use. Parties can select an all-public arbitration panel.  FINRA data show that investors fare better with all-public panels.