New Role for FINRA Arbitration Forum?

The arbitration forum run by the Financial Industry Regulatory Authority will soon take on a new role: hearing legal disputes that originate between registered investment advisors and their clients.  FINRA is a self-regulatory organization that oversees the activities of Wall Street firms.

According to Linda Fienberg, who serves as president of the agency's dispute resolution unit, FINRA will "definitely offer dispute resolution to investment advisors" as long as the organization receives authorization from Congress to serve as a self-regulator for such advisers.   After receiving such authorization, FINRA would need about nine months before its arbitration forum would be open to disputes involving registered investment advisers. 

Currently such advisors receive oversight from the Securities and Exchange Commission.  A self-regulatory organization such an FINRA would work in conjunction with the SEC, rather than supplanting it entirely when it comes to regulating investment advisors. 

Benefits of the FINRA Arbitration Forum

More than one arbitration attorneys representing investors in dispute with their investment advisors has observed that FINRA's arbitration forum is cost-efficient compared to other means of dispute resolution.  The change would also streamline all securities arbitration cases by providing a single forum that could acquire vast expertise in the field. 

"We have the technology and we'd have a special staff," Fienberg said, summing up the case at a recent investment arbitration seminar held in New York.