Finra opens arbitration system to RIAs

Oct 28, 2012 @ 12:01 am

By Bruce Kelly

The Financial Industry Regulatory Authority Inc. has opened up its arbitration system to registered investment advisers.

Until now, Finra arbitration has been used for investor or industry complaints involving securities firms and broker-dealers.

Linda Fienberg, president of Finra's office of dispute resolution, disclosed the change last Thursday in Austin, Texas, at the annual meeting of the Public Investors Arbitration Bar Association.

Finra will formally announce the program soon, and a few arbitration cases involving investment advisers are already in the system, she said.

The move is in no way related to Finra's effort to become the self-regulatory organization overseeing investment advisers, Ms. Fienberg said.

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

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

Year-to-date through Sept. 30, Finra had closed 3,747 arbitration cases, down 17% from 4,489 a year earlier. Meanwhile, 3,394 cases were opened, down 8% from 3,705 a year earlier.

bkelly@investmentnews.com Twitter: @bdnewsguy

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