FINRA proposed amendments to the organization's arbitration code would tighten the definition of "public" arbitrator for FINRA arbitration purposes.
In a release, FINRA said the proposed rule changes would provide that a person who worked in the financial industry "for any duration" during his or her career would always be classified as a non-public arbitrators. It added that "professionals who represent investors or the financial industry as a significant part of their business would also be classified as non-public, but could become public arbitrators after a cooling off period." Further, FINRA indicated that the proposed amendments would "reorganize the definitions" to make it easier to determine the correct arbitrator classification. The proposed rule change, approved by FINRA's Board of Governors, will be submitted to the SEC for approval.
This is somewhat shortsighted on FINRA's part. Having only non-public arbitrators while placing a "Scarlet A" on others will not result in better arbitrations.
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