FINRA Increases The Number Of Arbitrator For Panel Selection
Presently, FINRA sends the parties lists of available arbitrators generated by the NLSS (Neutral List Selection System) along with biographical information and awards history. Each party receives eight arbitrator names each for a public chairperson, a public panelist and an industry panelist. Since each side is allowed to strike four names on each list and rank the remaining names in order of preference, too often there is no acceptable arbitrator left to serve. When this happens, FINRA uses NLSS to “extend the list” to select an additional arbitrator to complete the panel. Since parties can only challenge an extended list arbitrator for cause, these “extended list” arbitrators have come to be known as “cram down” arbitrators.
Beginning September 27, 2010, FINRA Rule 12403 will increase the number of arbitrators from eight to ten for each category. The number of strikes remains the same at four. Having two additional names on each list will hopefully serve to give the parties a better chance at determining who they know will be on their panel and eliminate or reduce FINRA’s use of “extended list” appointments, or “cram down” arbitrators.