82 FR 22363 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating To Expediting List Selection in Arbitration
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 92 (May 15, 2017)
Federal Register Volume 82, Issue 92 (May 15, 2017)
| Page Range | 22363-22364 | |
| FR Document | 2017-09716 |
[Federal Register Volume 82, Number 92 (Monday, May 15, 2017)] [Notices] [Pages 22363-22364] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-09716] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80634; File No. SR-FINRA-2017-009] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change Relating To Expediting List Selection in Arbitration May 9, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on April 26, 2017, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA Rules 12402 and 12403 of the Code of Arbitration Procedure for Customer Disputes (``Customer Code'') and FINRA Rule 13403 of the Code of Arbitration Procedure for Industry Disputes (``Industry Code,'' and together with the Customer Code, the ``Codes''), to provide that the Director of FINRA's Office of Dispute Resolution (``ODR Director'') will send the list or lists generated by the Neutral List Selection System (``NLSS'') \3\ to all parties at the same time, within approximately 30 days after the last answer is due, regardless of the parties' agreement to extend any answer due date. --------------------------------------------------------------------------- \3\ NLSS is a computer system that generates, on a random basis, a list or lists of arbitrators from FINRA's rosters of arbitrators for the selected hearing location for each arbitration proceeding. The parties will select their panel through a process of striking and ranking the arbitrators on a list or lists generated by NLSS. --------------------------------------------------------------------------- The text of the proposed rule change is available on FINRA's Web site at http://www.finra.org, at the principal office of FINRA and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Background Under the Codes, a party must serve an answer on each other party to an arbitration within the timeframes specified under the applicable provisions of the Codes. For example, FINRA Rule 12303 requires a respondent to serve an answer specifying the relevant facts and available defenses to the statement of claim on each other party to the arbitration within 45 days of receipt of the statement of claim (the ``answer due date'').\4\ If there are multiple respondents to an arbitration, and the respondents are added at different times, each respondent would have a different answer due date.\5\ The Codes require the ODR Director \6\ to wait until after the last answer is due \7\ to send the list or lists of arbitrators generated by NLSS to the parties. Specifically, the Codes provide that the ODR Director must send the list or lists of arbitrators to all parties at the same time within approximately 30 days after the last answer is due.\8\ --------------------------------------------------------------------------- \4\ See also FINRA Rule 13303. \5\ If an amended claim adds a new party to the arbitration, the new party would be required to serve an answer on all other parties within 45 days of receipt of the claim. See FINRA Rules 12306, 12310, 13306, and 13310. \6\ Unless the Codes provide that the ODR Director may not delegate a specific function, the term includes FINRA staff to whom the ODR Director has delegated authority. See FINRA Rules 12100(k) and 13100(k). See also FINRA Rules 12103 and 13103. \7\ The answer due date for the last respondent added to the arbitration would be when the last answer is due for purposes of the Codes. \8\ The Codes also state that the parties will receive employment history for the past 10 years and other background information for each arbitrator listed. See FINRA Rules 12402, 12403, and 13403. --------------------------------------------------------------------------- Currently, when parties to an arbitration agree to extend the deadline for when an answer is due, the ODR Director uses that new, agreed-upon extended answer due date as the last answer due date for sending the arbitrator list or lists to the parties.\9\ FINRA believes that by sending the arbitrator list or lists after the original due date for the last answer, regardless of any extension, it can shorten the time it takes for an arbitration to conclude in those instances. Party agreements to extend answer due dates would no longer affect the timing of providing the arbitrator list or lists to the parties. --------------------------------------------------------------------------- \9\ In 2015, parties requested an extension to answer in approximately 65 percent of arbitration cases served; in 2016, the figure was approximately 62 percent. --------------------------------------------------------------------------- Proposed Rule Change FINRA is proposing to amend FINRA Rules 12402(c)(1), 12403(b)(1), and 13403(c)(1) to provide that the ODR Director will send the list or lists generated by NLSS to all parties at the same time, within approximately 30 days after the last answer is due, regardless of the parties' agreement to extend any answer due date. As parties must return the ranked arbitrator list or lists to the ODR Director no more than 20 days after the date upon which the ODR Director sent the list or lists to the parties,\10\ sending the list or lists after the original due date for the last answer would give all parties the same amount of time to create their ranked arbitrator list or lists. Further, FINRA believes that sending the list or lists at this time would result in earlier arbitrator appointment and, therefore, an earlier initial prehearing conference at which the hearings are scheduled.\11\ In the many instances in which the parties agree to extend an answer due date, FINRA believes the proposed rule change would help arbitrations conclude in less time than they do under current rules. --------------------------------------------------------------------------- \10\ See FINRA Rules 12402(d)(3), 12403(c)(3), and 13404(d). \11\ See FINRA Rules 12500(c) and 13500(c). --------------------------------------------------------------------------- As noted in Item 2 of this filing, if the Commission approves the proposed rule change, FINRA will announce the effective date of the proposed rule change in a Regulatory Notice to be published no later than 60 days following Commission approval. The effective date will be no later than 30 [[Page 22364]] days following publication of the Regulatory Notice announcing Commission approval. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,\12\ which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The proposed rule change is consistent with Section 15A(b)(6) of the Act. The proposal would enable the parties, or their counsel, to evaluate and rank the arbitrator list or lists at the same time that they prepare their responses in those circumstances where the parties request an extension to answer. Thus, the proposal would shorten the time it takes for such arbitrations to conclude and, thereby, make the forum more efficient and the case administration process more expeditious for investors. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Where parties agree to an extension or modification of any deadline for serving answers, the proposal would likely result in parties, or their counsels, evaluating the arbitrator list or lists and ranking their selections, while simultaneously preparing their responses. Currently, these activities occur serially. However, FINRA notes that parties often jointly request that the ODR Director send the list or lists before the last answer due date deadline. Therefore, FINRA believes that the proposed rule change would not be burdensome. As noted, the benefit to parties arises from concluding arbitrator selection earlier, thereby expediting the arbitration process. FINRA anticipates that this proposal would impose no significant costs to forum users. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period (i) as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-FINRA-2017-009 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FINRA-2017-009. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FINRA-2017-009 and should be submitted on or before June 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\13\ --------------------------------------------------------------------------- \13\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-09716 Filed 5-12-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 92 / Monday, May 15, 2017 / Notices 22363
technology. Consideration will be given same time, within approximately 30 must send the list or lists of arbitrators
to comments and suggestions submitted days after the last answer is due, to all parties at the same time within
in writing within 60 days of this regardless of the parties’ agreement to approximately 30 days after the last
publication. extend any answer due date. answer is due.8
Please direct your written comments The text of the proposed rule change Currently, when parties to an
to Pamela Dyson, Chief Information is available on FINRA’s Web site at arbitration agree to extend the deadline
Officer, Securities and Exchange http://www.finra.org, at the principal for when an answer is due, the ODR
Commission, C/O Remi Pavlik-Simon, office of FINRA and at the Director uses that new, agreed-upon
100 F Street NE., Washington, DC Commission’s Public Reference Room. extended answer due date as the last
20549; or send an email to: PRA_ answer due date for sending the
II. Self-Regulatory Organization’s
Mailbox@sec.gov. arbitrator list or lists to the parties.9
Statement of the Purpose of, and
FINRA believes that by sending the
Dated: May 9, 2017. Statutory Basis for, the Proposed Rule
arbitrator list or lists after the original
Eduardo A. Aleman, Change
due date for the last answer, regardless
Assistant Secretary. In its filing with the Commission, of any extension, it can shorten the time
[FR Doc. 2017–09729 Filed 5–12–17; 8:45 am] FINRA included statements concerning it takes for an arbitration to conclude in
BILLING CODE 8011–01–P the purpose of and basis for the those instances. Party agreements to
proposed rule change and discussed any extend answer due dates would no
comments it received on the proposed longer affect the timing of providing the
SECURITIES AND EXCHANGE rule change. The text of these statements arbitrator list or lists to the parties.
COMMISSION may be examined at the places specified
in Item IV below. FINRA has prepared Proposed Rule Change
[Release No. 34–80634; File No. SR–FINRA–
2017–009] summaries, set forth in sections A, B, FINRA is proposing to amend FINRA
and C below, of the most significant Rules 12402(c)(1), 12403(b)(1), and
Self-Regulatory Organizations; aspects of such statements. 13403(c)(1) to provide that the ODR
Financial Industry Regulatory Director will send the list or lists
A. Self-Regulatory Organization’s
Authority, Inc.; Notice of Filing of a generated by NLSS to all parties at the
Statement of the Purpose of, and
Proposed Rule Change Relating To same time, within approximately 30
Statutory Basis for, the Proposed Rule
Expediting List Selection in Arbitration days after the last answer is due,
Change
regardless of the parties’ agreement to
May 9, 2017. 1. Purpose extend any answer due date.
Pursuant to Section 19(b)(1) of the Background As parties must return the ranked
Securities Exchange Act of 1934 arbitrator list or lists to the ODR
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Under the Codes, a party must serve Director no more than 20 days after the
notice is hereby given that on April 26, an answer on each other party to an date upon which the ODR Director sent
2017, Financial Industry Regulatory arbitration within the timeframes the list or lists to the parties,10 sending
Authority, Inc. (‘‘FINRA’’) filed with the specified under the applicable the list or lists after the original due date
Securities and Exchange Commission provisions of the Codes. For example, for the last answer would give all parties
(‘‘Commission’’) the proposed rule FINRA Rule 12303 requires a the same amount of time to create their
change as described in Items I, II, and respondent to serve an answer ranked arbitrator list or lists. Further,
III below, which Items have been specifying the relevant facts and FINRA believes that sending the list or
prepared by FINRA. The Commission is available defenses to the statement of lists at this time would result in earlier
publishing this notice to solicit claim on each other party to the arbitrator appointment and, therefore,
comments on the proposed rule change arbitration within 45 days of receipt of an earlier initial prehearing conference
from interested persons. the statement of claim (the ‘‘answer due at which the hearings are scheduled.11
date’’).4 If there are multiple In the many instances in which the
I. Self-Regulatory Organization’s respondents to an arbitration, and the parties agree to extend an answer due
Statement of the Terms of Substance of respondents are added at different date, FINRA believes the proposed rule
the Proposed Rule Change times, each respondent would have a change would help arbitrations
FINRA is proposing to amend FINRA different answer due date.5 The Codes conclude in less time than they do
Rules 12402 and 12403 of the Code of require the ODR Director 6 to wait until under current rules.
Arbitration Procedure for Customer after the last answer is due 7 to send the As noted in Item 2 of this filing, if the
Disputes (‘‘Customer Code’’) and FINRA list or lists of arbitrators generated by Commission approves the proposed rule
Rule 13403 of the Code of Arbitration NLSS to the parties. Specifically, the change, FINRA will announce the
Procedure for Industry Disputes Codes provide that the ODR Director effective date of the proposed rule
(‘‘Industry Code,’’ and together with the change in a Regulatory Notice to be
of striking and ranking the arbitrators on a list or published no later than 60 days
Customer Code, the ‘‘Codes’’), to lists generated by NLSS.
provide that the Director of FINRA’s 4 See also FINRA Rule 13303.
following Commission approval. The
Office of Dispute Resolution (‘‘ODR 5 If an amended claim adds a new party to the
effective date will be no later than 30
Director’’) will send the list or lists arbitration, the new party would be required to
8 The Codes also state that the parties will receive
generated by the Neutral List Selection serve an answer on all other parties within 45 days
of receipt of the claim. See FINRA Rules 12306, employment history for the past 10 years and other
jstallworth on DSK7TPTVN1PROD with NOTICES
System (‘‘NLSS’’) 3 to all parties at the 12310, 13306, and 13310. background information for each arbitrator listed.
6 Unless the Codes provide that the ODR Director See FINRA Rules 12402, 12403, and 13403.
1 15U.S.C. 78s(b)(1). 9 In 2015, parties requested an extension to
may not delegate a specific function, the term
2 17CFR 240.19b–4. includes FINRA staff to whom the ODR Director has answer in approximately 65 percent of arbitration
3 NLSS is a computer system that generates, on a delegated authority. See FINRA Rules 12100(k) and cases served; in 2016, the figure was approximately
random basis, a list or lists of arbitrators from 13100(k). See also FINRA Rules 12103 and 13103. 62 percent.
10 See FINRA Rules 12402(d)(3), 12403(c)(3), and
FINRA’s rosters of arbitrators for the selected 7 The answer due date for the last respondent
hearing location for each arbitration proceeding. added to the arbitration would be when the last 13404(d).
The parties will select their panel through a process answer is due for purposes of the Codes. 11 See FINRA Rules 12500(c) and 13500(c).
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![22364 Federal Register / Vol. 82, No. 92 / Monday, May 15, 2017 / Notices
days following publication of the III. Date of Effectiveness of the also will be available for inspection and
Regulatory Notice announcing Proposed Rule Change and Timing for copying at the principal office of
Commission approval. Commission Action FINRA. All comments received will be
Within 45 days of the date of posted without change; the Commission
2. Statutory Basis does not edit personal identifying
publication of this notice in the Federal
FINRA believes that the proposed rule Register or within such longer period (i) information from submissions. You
change is consistent with the provisions as the Commission may designate up to should submit only information that
of Section 15A(b)(6) of the Act,12 which 90 days of such date if it finds such you wish to make available publicly. All
requires, among other things, that longer period to be appropriate and submissions should refer to File
FINRA rules must be designed to publishes its reasons for so finding or Number SR–FINRA–2017–009 and
prevent fraudulent and manipulative (ii) as to which the self-regulatory should be submitted on or before June
acts and practices, to promote just and organization consents, the Commission 5, 2017.
equitable principles of trade, and, in will: For the Commission, by the Division of
general, to protect investors and the (A) By order approve or disapprove Trading and Markets, pursuant to delegated
public interest. The proposed rule such proposed rule change, or authority.13
change is consistent with Section (B) institute proceedings to determine Eduardo A. Aleman,
whether the proposed rule change
15A(b)(6) of the Act. The proposal Assistant Secretary.
should be disapproved.
would enable the parties, or their [FR Doc. 2017–09716 Filed 5–12–17; 8:45 am]
counsel, to evaluate and rank the IV. Solicitation of Comments BILLING CODE 8011–01–P
arbitrator list or lists at the same time Interested persons are invited to
that they prepare their responses in submit written data, views and
those circumstances where the parties arguments concerning the foregoing, SECURITIES AND EXCHANGE
request an extension to answer. Thus, including whether the proposed rule COMMISSION
the proposal would shorten the time it change is consistent with the Act.
takes for such arbitrations to conclude Comments may be submitted by any of [Release No. 34–80630; File No. SR–
and, thereby, make the forum more the following methods: NASDAQ–2017–043]
efficient and the case administration
Electronic Comments
process more expeditious for investors. Self-Regulatory Organizations; The
• Use the Commission’s Internet NASDAQ Stock Market LLC; Notice of
B. Self-Regulatory Organization’s comment form (http://www.sec.gov/ Filing and Immediate Effectiveness of
Statement on Burden on Competition rules/sro.shtml); or Proposed Rule Change To Amend Rule
• Send an email to rule-comments@ 4702 (Order Types)
FINRA does not believe that the
sec.gov. Please include File Number SR–
proposed rule change will result in any May 9, 2017.
FINRA–2017–009 on the subject line.
burden on competition that is not
necessary or appropriate in furtherance Paper Comments Pursuant to Section 19(b)(1) of the
of the purposes of the Act. Where Securities Exchange Act of 1934
• Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2
parties agree to an extension or to Secretary, Securities and Exchange
modification of any deadline for serving notice is hereby given that on April 26,
Commission, 100 F Street NE.,
answers, the proposal would likely 2017, The NASDAQ Stock Market LLC
Washington, DC 20549–1090.
result in parties, or their counsels, (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
All submissions should refer to File Securities and Exchange Commission
evaluating the arbitrator list or lists and Number SR–FINRA–2017–009. This file (‘‘SEC’’ or ‘‘Commission’’) the proposed
ranking their selections, while number should be included on the rule change as described in Items I and
simultaneously preparing their subject line if email is used. To help the II below, which Items have been
responses. Currently, these activities Commission process and review your prepared by the Exchange. The
occur serially. However, FINRA notes comments more efficiently, please use Commission is publishing this notice to
that parties often jointly request that the only one method. The Commission will solicit comments on the proposed rule
ODR Director send the list or lists before post all comments on the Commission’s change from interested persons.
the last answer due date deadline. Internet Web site (http://www.sec.gov/
Therefore, FINRA believes that the rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s
proposed rule change would not be submission, all subsequent Statement of the Terms of Substance of
burdensome. As noted, the benefit to amendments, all written statements the Proposed Rule Change
parties arises from concluding arbitrator with respect to the proposed rule
change that are filed with the The Exchange proposes to amend
selection earlier, thereby expediting the
Commission, and all written Rule 4702 (Order Types) to modify the
arbitration process. FINRA anticipates behavior of Post-Only Orders in certain
that this proposal would impose no communications relating to the
proposed rule change between the situations.
significant costs to forum users.
Commission and any person, other than The text of the proposed rule change
C. Self-Regulatory Organization’s those that may be withheld from the is available on the Exchange’s Web site
Statement on Comments on the public in accordance with the
jstallworth on DSK7TPTVN1PROD with NOTICES
at http://nasdaq.cchwallstreet.com, at
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be the principal office of the Exchange, and
Members, Participants, or Others available for Web site viewing and at the Commission’s Public Reference
printing in the Commission’s Public Room.
Written comments were neither Reference Room, 100 F Street NE.,
solicited nor received. Washington, DC 20549, on official 13 17 CFR 200.30–3(a)(12).
business days between the hours of 10 1 15 U.S.C. 78s(b)(1).
12 15 U.S.C. 78o–3(b)(6). a.m. and 3 p.m. Copies of such filing 2 17 CFR 240.19b–4.
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Document Created: 2017-05-13 02:38:57
Document Modified: 2017-05-13 02:38:57
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 22363 |
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