Letters

FINRA Proposed Rule Change to Amend the Code of Arbitration Procedure

Summary

SIFMA sent comments to the SEC on the opportunity to comment on the FINRA proposed rule change to amend the code of arbitration procedure relating to requests to expunge customer dispute information. SIFMA initially commented on the Proposal in February 2018 in connection with FINRA’s publication of Regulatory Notice 17-42.

PDF

Submitted To

SEC

Submitted By

SIFMA

Date

22

October

2020

Excerpt

October 22, 2020

Via E-Mail to [email protected]
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Attn: Vanessa A. Countryman, Secretary

Re: File Number SR-FINRA-2020-030
FINRA Proposed Rule Change to Amend the Code of Arbitration Procedure Relating to Requests to Expunge Customer Dispute Information, Including Creating a Special Arbitrator Roster to Decide Certain Arbitration Requests (the “Proposal”)1

Dear Ms. Countryman:

The Securities Industry and Financial Markets Association (“SIFMA”)2 appreciates the opportunity to comment on the Proposal. SIFMA initially commented on the Proposal in February 2018 in connection with FINRA’s publication of Regulatory Notice 17-42.

3 The Proposal would amend the Customer and Industry codes of arbitration procedure to:

(1) impose requirements on expungement requests (a) filed during an investment-related, customer initiated arbitration (“Customer Arbitration”) by an associated person, or by a party to the customer arbitration on-behalf-of an associated person (“On-Behalf-Of Request”), or (b) filed by an associated person separate from a customer arbitration (“Straight-In Request”);

(2) establish a roster of arbitrators with enhanced training and experience from which a threeperson panel would be randomly selected to decide Straight-In Requests;

(3) establish procedural requirements for expungement hearings;

(4) codify and update the best practices of the Notice to Arbitrators and Parties on Expanded Expungement Guidance (the “Guidance”)
4that arbitrators and parties must follow; and

(5) establish requirements for notifying state securities regulators and customers of expungement requests.

The Proposal would also amend the Customer code to specify procedures for requesting expungement of customer dispute information arising from simplified arbitrations.

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