The Financial Industry Regulatory Authority (FINRA), the largest independent non-profit regulator for all securities firms engaged in business in the U.S., has proposed a long-awaited rule change intended to align its arbitration rules with the Dodd-Frank Consumer Reform and Wall Street Protection Act of 2010, Pub. L. No. 111-203, § 919 (2010) ("Dodd-Frank"), which invalidated predispute agreements to arbitrate certain whistleblower claims. The rule change would amend FINRA Rule 13200 of the Code of Arbitration Procedure for Industry Disputes, which presently mandates predispute arbitration of employment disputes (except statutory discrimination claims) between registered securities representatives and their employers.
FINRA's reach in America's financial life cannot be overstated. It oversees all securities, commodities and financial services firms doing business with the public, including more than 4400 securities firms, 160,000 branch offices and 635,000 registered securities representatives.1 Those in the financial services industry know that these hundreds of thousands of highly compensated individuals must complete Form U-4, pursuant to which they agree in advance to submit nearly all disputes with their employers, other persons, and related entities to final and binding arbitration under the provisions of FINRA's Arbitration Procedure.2 These predispute agreements to arbitrate typically preclude any kind of public court or trial proceedings in connection with such claims. The Form U-4 advises the employee, among other things, that he or she is "giving up the right to sue a member...
