The professional bar association for investor attorneys is accusing the Financial Industry Regulatory Authority (Finra) of increasing professional requirements for arbitrators without public notice or input, making it more difficult for aggrieved investors to access a “jury of their peers.”

The Public Investors Advocate Bar Association (PIABA) said in a statement that it “condemns” Finra “for implementing sweeping changes to new arbitrator qualifications without consulting investor advocates or providing an opportunity for public comment.”

The new rules went into effect on May 24. PIABA was not notified until days after implementation, said Adam Gana, president of PIABA and managing partner at Gana Weinstein LLP.

Arbitration fairness is already a major concern for investors and their attorneys, given that the industry prevails in about 70% of cases. The new arbitrator qualification requirements could exacerbate those concerns.

Under the changes, Finra raised the educational standard for arbitrators from two years of college-level credit to a four-year degree. The employment requirement was also tightened—from “five years of paid business and/or professional experience” to “five years of professional work experience,” defined as employment that requires advanced training and education. Examples include doctors, lawyers, teachers, accountants, registered representatives, and investment advisors.

Finra’s decision “to overhaul arbitrator qualifications in the dead of night—without transparency, notice, or stakeholder input—is unacceptable,” Gana said.

“Had PIABA been consulted, we would have made clear that these changes shrink the public arbitrator pool and harm investors. Instead, Finra took a fly-by-night approach that appears aimed at appeasing the financial industry at the expense of fairness.”

Finra spokeswoman Rita De Ramos said that the regulator is “constantly looking for ways to enhance the arbitration forum, and that includes the quality of the arbitrators. This change will help address the feedback that we have received that the prior standards discouraged attorneys and other professionals from applying to the roster.”

De Ramos also noted that Finra discussed raising the minimum employment and educational standards for arbitrators with members of the National Arbitration and Mediation Committee—one of Finra’s 12 advisory committees—and had discussed potential changes in 2016, 2018 and 2024. At least seven of NAMC’s committee are PIABA members.

“Dispute Resolution Services has carefully considered input from all committee members on this issue,” she added.

But the PIABA listed the following reasons it objects to the move:
• No Notice or Consultation: Making the changes unilaterally, without involving PIABA or other investor advocacy organizations.
• Reducing Arbitrator Diversity: Drastically limiting who can serve as a public arbitrator, excluding experienced small business owners and other qualified professionals. This, PIABA argues, will make the arbitrator pool less like a typical jury and more favorable to the securities industry.
• Shrinking an Already Strained Pool: At a time when the forum is already short on public arbitrators, this move could further delay justice for harmed investors.
• Industry Appeasement: The timing and nature of the changes suggest Finra may be responding to recent investor wins that upset industry participants.
• Lack of Public Input: PIABA is calling on Finra to immediately open a public comment period and reconsider the rule changes in light of stakeholder feedback.

“These new standards arbitrarily disqualify people with decades of relevant life and business experience who could offer fair, real-world perspectives to the arbitration process,” Gana said. “If Finra is serious about investor protection and arbitration fairness, it must reverse course and invite public input immediately.”

Joe Wojciechowski, a PIABA vice president and board member, called the changes “devastating for investors.”

“We’ve argued for years that Finra arbitrators need to look more like the investors they’re judging,” said Wojciechowski, a partner at Stoltmann Law Firm in Chicago. “We’d never in a hundred years pick only lawyers or doctors to sit on a client’s jury in court. We want arbitration panels to reflect the people we’re representing and to see things through their lens.”

The PIABA will work with lawmakers and the Securities and Exchange Commission, which oversees Finra, “to see if this can be undone,” Wojciechowski added.