Articles Tagged with Collective actions

The Securities and Exchange Commission has given accelerated approval to a proposed rule change by the Financial Industry Regulatory Authority. The proposal modifies FINRA’s Dispute Resolution’s Code of Arbitration Procedure for Industry Disputes exempts collective actions from arbitration. The SEC decided to approve the proposed rule change after determining that it is consistent with not just the Exchange Act’s requirements, but also with regulations and rules applicable to a national securities association.

While class actions have been exempt from arbitration, small and large customers claims, employee disagreements, and complex cases have not. However, with the increase in collective actions, FINRA now believes that it is better to hear such actions submitted under the Equal Pay Act of 1963, the Age Discrimination in Employment Act, and the Fair Labor Standards Act (FLSA) in the courtroom.

“This seems to be a reversal of FINRA’s earlier goals to expand their arbitration system to perhaps even include class action cases,” said FINRA Securities Lawyer William Shepherd. “Noting that FINRA is really just a trade association of all securities dealers, the suspicions are that legislators and courts have become so friendly to Wall Street lately that they no longer need their own dispute forum to avoid responsibility for their misdeeds.”