03.02.26

FINRA Seeks To Revamp Arbitration Rules

by: Melanie Waddell

The Financial Industry Regulatory Authority (FINRA) is requesting comment by May 1 on proposed reforms to its arbitration system designed to streamline cases and reduce costs, including revising arbitrator qualifications, capping punitive damages, permitting certain high-value or institutional disputes to move outside FINRA and expanding protections for firms’ regulatory disclosures. Supporters say the review addresses long-standing concerns from both industry and defense attorneys. However, the Public Investors Advocate Bar Association argues the changes could erode critical investor safeguards, weaken accountability and make it harder for retail investors to pursue fair remedies in disputes with brokerage firms.

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