Finra opens arb system to RIAs

Move by regulator not related to SRO push; 'requests from attorneys'

Oct 25, 2012 @ 1:24 pm

By Bruce Kelly

finra, arbitration, RIAs, broker-dealers
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The Financial Industry Regulatory Authority Inc. has opened up its arbitration system to registered investment advisers.

Until now, Finra arbitration has been used in investor or industry complaints involving securities firms and broker-dealers. RIAs now can use the system, according to Linda Feinberg, president of Finra's office of dispute resolution.

Ms. Feinberg disclosed the change Thursday in Austin, Texas, at the annual meeting of the Public Investors Arbitration Bar Association.

She said that Finra will formally announce the program soon and that a few arbitration cases involving investment advisers are already in the authority's system.

The move to include RIAs in Finra arbitration is in no way related to Finra's effort to become the self-regulatory organization overseeing investment advisers, according to Ms. Feinberg.

“We're doing it because we had a lot of requests from attorneys,” she said.

Other options, such as arbitration outside of an SRO and taking a claim to court, are more expensive than Finra arbitration, she said, adding that both parties had to agree to use Finra's arbitration system for a claim to go forward.

Through Sept. 30, Finra, which operates the largest dispute resolution forum in the securities industry, had closed 3,747 arbitration cases this year, down 17% from 4,489 through September 2011. Over the same nine months, 3,394 cases were opened, down 8% from 3,705 through the first nine months of 2011.

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