Membership Application Program

FINRA amended its Membership Application Program (MAP) rules to create further incentives for the timely payment of arbitration awards by preventing an individual from switching firms, or a firm from using asset transfers or similar transactions, to avoid payment of arbitration awards. The amendments will address situations where: (1) a FINRA member firm hires individuals with pending arbitration claims, where there are concerns about the payment of those claims should they go to award or result in a settlement, and the supervision of those individuals; and (2) a member firm with substantial arbitration claims seeks to avoid payment of the claims should they go to award or result in a settlement by shifting its assets, which are typically customer accounts, or its managers and owners, to another firm and closing down. These changes became effective on September 14, 2020.

FINRA Regulatory Notice 20-15 (May 21, 2020): FINRA Amends Rules Governing Application Program to Incentivize Payment of Arbitration Awards


Inactive Members and Associated Persons in Arbitration

FINRA amended its Code of Arbitration Procedure for Customer Disputes (Customer Code) to expand a customer’s options to withdraw an arbitration claim if a member firm or an associated person becomes inactive. These amendments also allow customers to amend pleadings, postpone hearings, request default proceedings and receive a refund of filing fees in these situations.

FINRA Regulatory Notice 20-11 (April 9, 2020): FINRA Amends Arbitration Code to Expand Options Available to Customers if a Firm or Associated Person Becomes Inactive


Simplified Arbitration

FINRA has amended its rules to provide a new option for simplified arbitration. The amendments provide an additional hearing option for parties in arbitration with claims of $50,000 or less, excluding interest and expenses. The amendments became effective on September 17, 2018.

FINRA Regulatory Notice 18-21 (July 23, 2018): SEC Approves Amendments to Arbitration Codes to Provide an Additional Hearing Option in Simplified Arbitration