In January, I reported here that FINRA had filed a rule change proposal with the SEC to amend FINRA Dispute Resolution’s Code of Arbitration Procedure to clarify that collective actions are not arbitrable in the forum. The SEC granted accelerated approval earlier this month. The approval order explains that FINRA amended slightly its proposal in response to a comment letter it received from SIFMA (Securities Industry and Financial Markets Association), illustrating the critical importance of the public comment process.
Interestingly, after the April 9 approval order, FINRA further responded to comments in a letter to the SEC dated April 13. In that letter, FINRA expressed concern that SIFMA’s comment letter implied that member firms could require employees to arbitrate employment disputes in a forum other than FINRA, that member firms could preclude collective action claims in any forum, and that member firms could preclude employees from joining multiple claims in a single FINRA arbitration. FINRA wrote to expressly disagree with SIFMA’s position on these points. FINRA is very concerned, and rightly so, that brokerage firms are emboldened by the AT&T Mobility decision and inserting in their dispute resolution clauses in employement and customer agreements further restrictions on their rights to bring, among other claims, class and collective actions.