FINRA Updates (Fixes?) Its Definition of Nonpublic Arbitrator… and Pulls Talent from the Bench!

The SEC has approved FINRA’s proposed amendments to the definition of nonpublic arbitrator contained in FINRA’s Code of Arbitration Procedure.

Back in 2015, FINRA tinkered with the definition of nonpublic arbitrator, which essentially knocked hundreds of qualified individuals out of the public category, and a significant number of these refugees didn’t fit the complicated nonpublic definition.  The result?  A big waste of qualified talent sitting on the bench in a venue that depends on it.

This current fix, effective October 9, is necessary to pull all those qualified refugees off the bench.  It eliminates the 2015 gap by classifying any qualified individual who doesn’t meet the definition of public arbitrator as a nonpublic arbitrator — a simple, “If not A, then B” flowchart…

The definition of public arbitrator remains unchanged, and is any individual who:

  • Has never been employed by the securities industry
  • Does not provide services to the industry or to parties engaged in securities arbitration and litigation, and
  • Does not have immediate family members or co-workers who do so

And just to clarify, a nonpublic arbitrator is now any individual who does not meet the above criteria.  In other words, an individual who:

  • Has been employed by the securities industry
  • Has provided services to the industry or to parties engaged in securities arbitration and litigation, and
  • Could have immediate family members or co-workers who do so

Stay tuned with FIRE Solutions, where we continually update our exam prep and Firm Element Continuing Education courses to reflect these dizzying regulatory developments.  Our Series 10 and 24 exam prep courses include this update as well.