Plaintiff Lawyers to Finra: End ‘Absurd’ Arbitrator Removal Practices
by Miriam Rozen
January 22, 2026
Investor advocates sent a letter to the Financial Industry Regulatory Authority demanding it “cease immediately” an “absurd practice” of allowing parties to remove prospective arbitrators from ranking lists if they had previously ruled against them in a similar case.
Finra’s recent practice of allowing for those removals “significantly deviates from case law” and tilts the scales to favor the industry in arbitration, according to the missive, which was signed by Michael Bixby, president of Public Investor Advocate Bar Association. The letter was addressed to Finra CEO Robert Cook.
PIABA’s letter comes after a court brief filed by Stifel Financial earlier this month in a lawsuit related to a string of claims tied to Chuck Roberts, a former star broker in Miami. Stifel informed the court, where it is seeking to overturn a $133 million arbitration award, that Finra had granted its request to remove two candidates from a list of potential panelists in an upcoming arbitration.
Finra agreed with the basis of Stifel’s argument that the chair of that panel demonstrated her bias by ruling against it in a prior case also involving Roberts.
“It is reasonable to infer” that arbitrators “are biased or lack impartiality” when they have earlier awarded “substantial damages and attorneys’ fees” in cases that involve the same firms, financial advisor, supervisors and products, Finra wrote in granting Stifel’s removal.
Finra’s move to eliminate the arbitrators from its list of prospective panelists means that Stifel will be able to preserve the strikes that it can use to narrow down the list of potential arbitrators. Under Finra rules, both sides receive three lists of potential panelists and can remove a set number from each for any reason.
“Finra’s current practice tilts the scales in favor of the industry, directly undermines the arbitration system, wastes Finra resources and erodes confidence in the fairness of Finra,” Bixby wrote. “Ultimately, it also punishes arbitrators who award damages against brokerage firms and sends an intimidating message that holding brokerage firms accountable for misconduct is frowned upon and may result in removal from future cases.”
Two lawyers who have represented firms in arbitration said previously that they supported Finra’s policy because claimants on both sides should be entitled to present their case to a blank slate of arbitrators and not forced to argue in front of one that has already shown how they view the same set of facts and circumstances.
Investors could also take advantage of the same policy, noted Tom Lewis of Stevens & Lee in New Jersey. “Any precedential value will be limited, but it will be offered to both sides,” Lewis said previously.
But it would be harder for investors to take advantage of the policy given each complaint is brought by a different individual and often by a different law firm.
“If Finra’s apparent logic were applied consistently, any arbitrator who previously heard a Wells Fargo case would have to be removed from all future Wells Fargo cases,” Bixby added. “Any arbitrator who heard a case involving structured products could never hear another structured products case. Any arbitrator who presided over a churning dispute would be forever barred from hearing another churning case.”