What is a Non-Public FINRA Arbitrator?

             A non-public FINRA arbitrator is thought of as an 'industry' person.  Investors are often concerned to have such arbitrators on their panel over the fear that industry arbitrators would be inclined to favor the industry, not the investor.  Others argue that these industry insiders would be willing, if not eager, to punish individuals who tarnish the industry’s reputation.  In any event, investors now have the right to choose whether there will be any non-public arbitrators on their panel.

                FINRA specifically defines who qualifies as a non-public arbitrator.  For instance, an arbitrator will be considered to be non-public if they presently, or within the past five years, were associated with a broker or a dealer, were registered under the Commodity Exchange Act, retired from - or spent a substantial portion of their career engaging in - business activities related to brokers, dealers, or members of a commodities exchange.  A full list of what experience will render someone a non-public arbitrator can be found in the code of arbitration procedure

See FINRA Code of Arbitration Procedure for Customer Disputes 12400(p).

How are FINRA Arbitrators Selected?

The Financial Industry Regulatory Authority (FINRA) maintains a roster of eligible arbitrators that correspond to the hearing location.  For example, if your securities arbitration will be held in Minneapolis, Minnesota, your pool of arbitrators will come from Minnesota and surrounding states. After arbitration is filed, FINRA generates a list of potential arbitrators from the aforementioned pool by using FINRA’s Neutral List Selection System.

The parties receive a list of potential non-public, public, and chairperson-eligible arbitrators.  After researching the arbitrators, the parties rank and strike them.  FINRA factors in the rankings and informs the parties of which three arbitrators will preside over the case.

See Rule 12400, FINRA Code of Arbitration Procedure for Customer Disputes.