FINRA Rule Defining Industry Arbitrator Approved by SEC

Individuals who can’t serve as non-public arbitrators in Financial Industry Regulatory Authority arbitration proceedings may soon be added to the roster, under a rule change approved Sept. 11 by the SEC.

Non-public arbitrators are individuals who worked or otherwise were associated with the securities industry. Public arbitrators are individuals without industry ties.

FINRA proposed the rule change to close an “eligibility gap” created by 2015 rule changes that—in an effort to dispel neutrality concerns by users of the forum—broadened the disqualifications from serving as a public arbitrator.

The move led to the disqualification of more than 800 individuals as public ...