FINRA Warns Against Electronic Devices At Arbitration Hearings

FINRA, the Financial Industry Regulatory Authority, plan to warn parties in its arbitration hearings against using electronic devices to secretly record and transmit the proceedings writes Dan Jamieson in a recent article in InvestmentNews.com.

This warning began by complaints from the Securities Experts' Roundtable Inc., a group of expert witnesses, about several instances of “electronic eavesdropping.” Witnesses were recorded and their testimony apparently made available to others outside the hearings writes Jamieson.

In a September letter to FINRA, the Roundtable described three separate instances in which its members had encountered eavesdropping, and they asked FINRA to create policies and issue guidance about the practice. Roundtable also said that allowing outsiders to view a hearing could give one of the parties the ability to benefit from the assistance of unnamed co-counsel.

“It's a private forum,” Jeffrey Schaff, president of the Roundtable said in an interview. “It's a controlled forum [fusion_builder_container hundred_percent="yes" overflow="visible"][fusion_builder_row][fusion_builder_column type="1_1" background_position="left top" background_color="" border_size="" border_color="" border_style="solid" spacing="yes" background_image="" background_repeat="no-repeat" padding="" margin_top="0px" margin_bottom="0px" class="" id="" animation_type="" animation_speed="0.3" animation_direction="left" hide_on_mobile="no" center_content="no" min_height="none"][where] people sign in, sign out and there are some facts [presented] that some witnesses are not allowed to hear.”

The InvestmentNews.com article goes on to say that FINRA told Mr. Schaff in a letter this month that the regulator would be “educating our [arbitrators] about this concern” in an upcoming article in its “Neutral Corner” newsletter for arbitrators and mediators. The article should be out by the March issue, Finra spokeswoman Michelle Ong wrote in an email.

“Anything that would give an unfair advantage to one side would not be allowed” by arbitrators, Ms. Ong said. In its letter, Finra also said it will consider changes to the opening script that arbitrators use to “alert parties to the importance of seeking approval of the other participants and the arbitrators before attempting to transmit or record the proceedings.”

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide before FINRA. If you have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: https://www.securitieslawyer.com.

[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]