FINRA Dispute Resolution announced earlier this month that it has adopted a special process for investor's arbitration claims relating to auction-rate securities. Under this new process, investors may elect for their three person panel to have no arbitrators that were affiliated with firms that recently sold auction-rate securities. Typically, investor claims are heard by three-person panels, two public members and one industry member, or non-public member. Under these special process, FINRA will ensure that the non-public member is not affiliated, or recently affiliated with a broker-dealer that recently sold auction-rate securities.
While many investors who purchase auction-rate securities will have their securities repurchased by the broker-dealer under several recent settlements with various regulatory agencies, some investors may still have other damages for which they seek compensation in arbitration. And, some investors who purchased from non-settling broker-dealers, may desire to seek compensation by filing an arbitration claim with FINRA.
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