A year ago, Finra began the process of reclassifying nearly 500 public arbitrators to non-public status—a move affecting about 14 percent of its total public pool of 3,567 people.
Before the rule change was implemented, state regulators and the Financial Services Institute, among others, expressed concerns about a diminishing pool of public panelists.
Because the change also put industry defense lawyers and plaintiff attorneys into the non-public category, the number of arbitrators qualified to chair hearings was especially affected, added Robert Banks, a plaintiff lawyer at Samuels Yoelin Kantor in Portland.
“If you’re in the non-public pool, you are not qualified to be a chair,” he said.
Case in point: Banks said seven of the 10 proposed chair-qualified people he got on a recent case were outside his home state of Oregon.
Ryan Bakhtiari, an investor attorney at Aidikoff Uhl & Bakhtiari in Beverly Hills, Calif., and chair of Finra’s National Arbitration and Mediation Committee, feels that the revamped non-public pool might actually relieve some of the demand for public panelists.
“We’re beginning to see a potential change in attitude about using all-public pools,” he said. “I believe [plaintiff lawyers] will be taking another look at the non-public list, which is not just branch managers and industry folks anymore.”
Meanwhile, Finra has been recruiting more public arbitrators.
The regulator “has been very aggressive in its recruitment efforts, which have resulted in a 14 percent increase in public arbitrators in the last year,” said Finra spokeswoman Michelle Ong in an e-mail.
To help attract and retain arbitrators, in late 2014 Finra increased arbitrator pay by 50 percent, to $600 for a full day, and raised hearing fees to cover the cost.
Nevertheless, a year later Finra’s own arbitration task force called for another bump, to $1,000 per day.