July 24, 2014
Elizabeth M. Murphy, Secretary
Securities and Exchange Commission
100 F Street NE.
Washington, D.C. 20549-1090
Re: SR-FINRA-2014-026 - Proposed rule change to amend the Code
of Arbitration Procedure to increase arbitrator honoraria by
increasing arbitration filing fees, member surcharges, process fees
and hearing session fees
Dear Ms. Murphy:
I write on behalf of the Public Investors Arbitration Bar Association ("PIABA"), an international bar association comprised of attorneys who represent investors in securities arbitrations. Since its formation in 1990, PIABA has promoted the interests of the public investor in all securities and commodities arbitration forums, while also advocating for public education regarding investment fraud and industry misconduct. Our members and their clients have a strong interest in rules promulgated by the Financial Industry Regulatory Authority ("FINRA") relating to both investor protection and disclosure.
Pursuant to Rule of Practice 192(a) of the Securities and Exchange Commission, FINRA is filing with the Securities and Exchange Commission ("SEC" or "Commission") a proposed rule change to amend FINRA Rules 12214 (Payment of Arbitrators), 12800 (Simplified Arbitration), 12900 (Fees Due When a Claim is Filed), 12901 (Member Surcharge), 12902 (Hearing Session Fees, and Other Costs and Expenses), and 12903 (Process Fees Paid by Members) of the Customer Code. The proposed rule change would also amend Rules 13214 (Payment of Arbitrators), 13800 (Simplified Arbitration), 13900 (Fees Due When a Claim is Filed), 13901 (Member Surcharge), 13902 (Hearing Session Fees, and Other Costs and Expenses), and 13903 (Process Fees Paid by Members) of the Industry Code. The overall effect would be an across the board fee increase for claims brought and administered in the FINRA forum.
In general, PIABA is not opposed to raising the honorarium. PIABA is concerned, however, that requiring investors to pay the increased honorarium by raising the filing fees may deny them access to the forum. Also, FINRA has provided no legitimate basis to require investors with more alleged financial losses at stake pay a higher amount of filing fees. The concept of basing a filing fee on how much financial harm a victim suffers runs afoul of FINRA’s mission of protecting investors.
Since investors are forced into the FINRA arbitration forum as a result of mandatory arbitration, PIABA believes that FINRA members should be responsible for paying 100% of the proposed increased filing fees. This point is emphasized even more when you consider that arbitration panels rarely assess forum fees against respondents even when they find the respondents liable for the claimants’ losses.
PIABA asks that FINRA reconsider its proposal and charge any increase in the filing fees to its members, who have required that customers use the forum. Thank you for the Commission for the opportunity to comment on the proposal.
Very Truly Yours,
Jason Doss
President