The Financial Industry Regulatory Authority (FINRA) announced today that it has established a special process for resolving auction rate securities-based claims in its arbitration forum. Qualifying investors will have the option of having their claims heard by a three-person panel of arbitrators, none of whom would be affiliated with a firm that recently sold auction rate securities. The new process comes as a result of the one developed by FINRA for the Securities and Exchange Commission’s settlement with Citigroup.
The arbitration panels will continue to consist of two public arbitrators and one non-public arbitrator.
To date, more than 170 cases involving auction rate securities have been filed in FINRA’s Dispute Resolution forum. Individuals who since Jan. 1, 2005, have either worked for a firm that sold auction rate securities or themselves sold or supervised someone who sold them will not appear on non-public arbitrator lists given to parties in these and future auction rate securities arbitration cases.
“In light of the settlement with Citigroup, FINRA believes it is a matter of fairness that all investors with auction rate securities claims, regardless of the firm involved in the dispute, be handled in this manner,” said Linda Fienberg, President of FINRA Dispute Resolution. “FINRA will work expeditiously with parties to put this process in place as soon as possible so these cases won’t be unduly delayed.”
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