Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: SR-FINRA-2012-012 Proposed Rule Change To Amend FINRA’s Customer and Industry Codes of Arbitration Procedure to Raise the Limit for Simplified Arbitration from $25,000 to $50,000
Dear Ms. Murphy:
Thank you for the opportunity to comment on the above-referenced proposal to amend FINRA’s Customer and Industry Codes of Arbitration procedure to raise the limit for simplified arbitration to $50,000. I write on behalf of the Public Investors Arbitration Bar Association (“PIABA”). PIABA is supportive of the new rule, which we believe increases the efficiency of FINRA arbitrations and also better serves aggrieved investors.
PIABA is a 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. Our members and their clients have a strong interest in the FINRA arbitration rules.
We are pleased that FINRA has recognized the need to update its Codes to encompass a greater percentage of cases for simplified arbitration. The $25,000 threshold instituted in 1998 is too low to effectively serve its purpose. As noted in the rule proposal, the current threshold only captures 10 percent of cases, where it once covered 21 percent of all cases filed with FINRA. This decline can be effectively countered by raising the threshold to $50,000.
Further, we believe that this rule would lead to increased efficiency by allowing more claims to be resolved through simplified arbitration. Simplified arbitration is beneficial because of the reduced resources it requires, and the costs that can be saved by cutting out travel expenses. Increasing the amount of claims captured by simplified arbitration from 10 percent to the projected 17 percent would increase efficiency in various ways.
Additionally, we believe that this rule suits the purposes of investors, who almost invariably have no choice but arbitration. For varying reasons, simplified arbitration is preferable for some claimants, and this proposal would give them a greater flexibility. We have often seen claimants who have trouble meeting not only the expenses, but the demands of travel required in regular arbitration. Moreover, some claimants are averse to the prospect of appearing before a hearing panel and being subject to questioning and examination. The new threshold allows more claims to be resolved without these burdens, and increases the amount that claimants who want to avoid an arbitration hearing may claim.
Therefore, PIABA is supportive of the new rule. Once more, we appreciate the opportunity to comment on the proposed rule.
Respectfully submitted,
Ryan K. Bakhtiari