Discovery in FINRA Arbitration

FINRA refers to arbitration as a “faster, cheaper and less complex” means of resolving disputes than civil litigation. Like all FINRA “rules,” however, the application of these principles (or lack thereof) will be entirely decided by the arbitrators selected to rule on your claim.

The FINRA discovery rule simply states that a party may request documents from any other given party. The rule is completely void of any limiting language regarding what documents may be requested and how. A receiving party may file an objection to a discovery request, which must then be ruled upon by the arbitrators. In making their decision, arbitrators may consider the relevance of documents being requested, but are not bound by the Rules of Evidence that would apply in a court proceeding.

As a result, the arbitrators have the ultimate saying power in regards to the documents a party must produce. Since depositions are strongly discouraged by FINRA rules, document discovery is less imperative. If a party fails to abide by the arbitrators’ rulings on discovery, numerous sanctions can be imposed by the arbitrators. In customer cases only, FINRA has prepared a Discovery Guide to inform arbitrators and parties as to what documents are presumably discoverable. Those documents that are presumed to be discoverable must be automatically produced by parties involved, depending on the types of claims asserted.

For this reason, it is essential that you have an experienced securities arbitration attorney on hand to prepare your Statement of Claim. This statement will assist in protecting any potential claims, thus obtaining the maximum presumptive discovery under the discovery guide. Of course, like all FINRA rules and guidelines, the final determinations regarding discovery are made by the arbitrators.

Since the FINRA discovery guide does not apply to employment-related arbitration proceeds, it is critical that you have a skilled FINRA securities arbitration attorney handle your discovery requests. An experienced attorney possesses familiarity with the employment practices in the securities industry regarding recruitment, employment and termination. Armed with this knowledge, an experienced attorney can draft detailed discovery requests to obtain essential documents that can either make or break your claims. Especially considering today’s high-tech approach to electronic communications and document storage, it is essential that appropriate requests be made for electronically-stored documents, including email, cell phone records, and telephone logs.

Considering the steps necessary to obtaining discovery requests, one must ensure readiness in the face of arbitration. In preparation for arbitration, you must be sure that the documents most important to your case are obtained in discovery from your former stockbroker or employer. The experienced FINRA arbitration attorneys at Lubiner, Schmidt & Palumbo, LLC are eager to assist in preparing you for arbitration and expediting the process of obtaining discovery.