FINRA Arbitration Hearing Fees

Under the Financial Industry Regulatory Authority (FINRA) arbitration procedure, it is possible for investors to hold stockbrokers and other financial professionals responsible for their misconduct . During the course of these proceedings, there may be several hearings scheduled. If either party requests one of these hearings to be postponed or cancelled, it may result in being forced to pay a late cancellation fee to the arbitrators.

After arbitrator selection has been completed, an initial pre-hearing conference (IPHC) is held. Ordinarily, the IPHC is conducted by telephone and the discussion includes procedural issues, the possibility of using mediation as an alternative, discovery, and scheduling future hearings. Frequently, hearing dates are scheduled months in advance. Importantly, an arbitrator only receives payment for hearing sessions that he or she is involved in. Late cancellations often mean the arbitrator will not receive compensation, as well as be unable to perform other work during the scheduled hearing period due to the late notice.

The Code of Arbitration Procedure for Customer Disputes (Customer Code) and the Code of Arbitration Procedure for Industry Disputes (Industry Code) provide the regulations regarding payments to arbitrators for the work they perform for FINRA’s dispute resolution forum, in addition to the fees assessed to the parties in arbitration proceedings. Under these codes , if a party asks to postpone or cancel within ten days of a scheduled hearing and it is granted by the arbitrator(s), the requesting party must pay a cancellation fee of $600 per arbitrator.

The requirement of requesting postponement or cancellation more than ten days prior to the hearing, and the penalty for failing to do so, is intended to encourage all parties to begin preparing for their case earlier. Further, it may lead to the initiation of settlement negotiations earlier in the process.

If the request is made more than ten days before the scheduled hearing, there is no late cancellation fee, regardless of when the request is granted by the arbitrator. In the event that the postponement request is made within the ten day period in relation to consecutively scheduled hearings and is granted, the late cancellation fee of $600 per arbitrator is only applicable to the first of the scheduled hearings and not to the remaining scheduled hearing sessions cancelled.

Under most circumstances, the reason for the request to postpone or cancel is irrelevant. However, if extraordinary circumstances exist, such as a serious accident or sudden, severe illness, it is within the discretion of the arbitrator to waive the late cancellation fee. In other words, the arbitrator may waive the fee, but is not required to do so.

If you are an investor who has been victimized by an investment professional’s misconduct, it is possible you can recover under the FINRA arbitration procedure. For more information, contact an experienced securities law attorney today. At the Silver Law Group, we provide investors with help through the process of both FINRA arbitration and mediation. We look forward to hearing from you.