FINRA RN 17-34
Summary
SIFMA provided comments to FINRA on Notice 17-34. Notice 17-34 requests comment on whether FINRA should continue to permit compensated non-attorney representativesto represent customer claimants in securities arbitration and mediation. In the interests of investor protection and the integrity of the arbitral forum SIFMA recommends that FINRA henceforth prohibit CNAR firms from representing customer claimants.
Excerpt
December 15, 2017
Via E-Mail to [email protected]
Marcia E. Asquith
Office of the Corporate Secretary
FINRA
1735 K Street, NW
Washington, DC 20006-1506
Re: Regulatory Notice 17-34 (non-attorney representatives in arbitration), dated October 18, 2017 (“Notice 17-34”)
Dear Ms. Asquith:
The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on Notice 17-34.2 Notice 17-34 requests comment on whether FINRA should continue to permit compensated non-attorney representatives (“CNAR firms”) to represent customer claimants in securities arbitration and mediation. In the interests of investor protection and the integrity of the arbitral forum, and for the reasons further detailed below, SIFMA recommends that FINRA henceforth prohibit CNAR firms from representing customer claimants.
As a threshold matter, we remain supportive of FINRA’s position of allowing customer claimants to appear pro se – just as they may in court, or together with the help of a trusted relative or friend, or with the assistance of a law school arbitration clinic. At the same time, proceeding in FINRA’s arbitral forum without the benefit of direct representation by a duly licensed attorney is not without its risks.
The FINRA Code of Arbitration for Customer Disputes is 50-pages in length and contains over 80 rules, each with numerous subparts. Many of the rules have also been subject to frequent amendments and include interpretive materials and related regulatory notices. The rules are thus fairly sophisticated and the arbitration process is fairly complex. A claimant customer’s representative may be called upon to advise his or her client in the following areas, among others:
(1) advising investors as to whether or not they are compelled to arbitrate under their investor-broker agreement; (2) advising investors of the eligibility rules and statute of limitations for any potential claims; (3) advising investors as to the scope of the arbitrators authority; (4) advising investors whether to settle the dispute before filing a claim; (5) advising investors as to the merits of specific claims and defenses; (6) advising investors whether attorneys or expert witnesses should be hired; (7) advising investors whether a petition to stay the arbitration should be filed; (8) advising investors on the possibility and merits of related or alternative civil actions; (9) conducting discovery including depositions; (10) oral advocacy including; presenting evidence, raising objections, examining witnesses and voir dire of experts, preparing opening and closing arguments; (11) written advocacy including preparing and filing the initial written states of claims, answers, counter-claims, motions, and legal memoranda; (12) confirming, collecting or vacating and arbitral award.3
In order to reasonably protect the rights and property of a customer claimant, the person giving the foregoing advice should possess legal skill and a knowledge of the law greater than that possessed by the average layperson.4
1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
2 Notice 17-34, available at http://www.finra.org/industry/notices/17-34.
3 See Fla. Bar re Advisory Opinion on Nonlawyer Representation in Sec. Arbitration, 696 So. 2d 1178, 1180 – 81 (Fla. 1997).
4 This statement remains true regardless of whether a particular state bar association concludes that representing a client in FINRA arbitration technically constitutes the “practice of law.” See id. at 1182 (concluding that it does).