ABTL Report - Fall 2026 Edition - Flipbook - Page 3
ABTL - Los Angeles
Fall 2026
Arbitrator Selection Versus Judge or Jury
NAVIGATING FINRA ARBITRATION:
LESSONS FROM THE TRENCHES
Kathy J. Huang
One of the most consequential procedural distinctions is
how the decision-maker is chosen. In state court, litigants face
a randomly assigned judge and often a jury of laypersons. For
customer disputes in FINRA arbitration, panels may consist
of one to three arbitrators. See FINRA Rule 12401. In cases
involving claims of more than $100,000 or non-monetary
claims, the panel can consist of three arbitrators: two “public”
arbitrators (generally those who have no securities industry
af昀椀liation) and one “non-public” arbitrator. See FINRA Rule
12403. Parties may strike all non-public arbitrators, often
resulting in an all-public panel. Each party receives a computergenerated, random list of potential arbitrators who are available
for the selected hearing, with disclosure reports detailing each
arbitrator’s background. Id. For a customer dispute with three
arbitrators for a FINRA arbitration proceeding in downtown
Los Angeles, that list could generate more than 30 names:
10 arbitrators from the non-public roster, 15 from the public
roster, and 10 public arbitrators from the chairperson roster.
Id. The parties then select the arbitrators through a process of
striking and ranking: each separately-represented party may
strike arbitrators for any reason, and then rank their remaining
preferences in order. Id.
If California state court is the “wild
west” of litigation forums, FINRA
arbitration is the last frontier. For
attorneys accustomed to courtroom
practice, FINRA arbitration presents
a different procedural landscape,
which affects case strategy at every
stage. This article highlights the key
differences between FINRA arbitration
and California state court litigation and
offers practical strategies for litigators
navigating the FINRA forum.
While litigators in California may
be familiar with arbitrations proceeding
before JAMS or the AAA, securitiesrelated disputes often proceed through
the Financial Industry Regulation
Gillian H. Clow
Authority (“FINRA”), which operates
one of the largest dispute resolution
forums in the country. See FINRA,
Dispute Resolution Statistics, https://
www.昀椀nra.org/arbitration-mediation/
dispute-resolution-statistics
(last
visited Aug. 9, 2026). FINRA is a
private, not-for-pro昀椀t organization
that operates under the oversight of
the U.S. Securities and Exchange
Robia Amjad
Commission (SEC). See FINRA,
About Us, https://www.昀椀nra.org/about (last visited Aug. 9,
2026). It writes and enforces rules to ensure broker-dealers
comply with federal law and FINRA’s rules. Id. Broker-dealers
who sell securities to the public must be SEC-registered and
members of FINRA. See 15 U.S.C. § 78o(b)(8) (conditioning
effectiveness of SEC broker-dealer registration on membership
in a registered securities association).
Before ranking arbitrators, it is important to review
their FINRA disclosure reports (which detail professional
background, prior arbitration experience, and disclosed
con昀氀icts), and research their publicly available biographical
information online and their award history in FINRA’s online
database. Use all available information to identify panelists
whose professional experience and track record align with
your case theory.
While this process is purported to provide litigants with
more control over selecting decision-makers, in practice, given
the large panelist pool and the number of parties potentially
ranking and striking, you may end up with arbitrators for the
panel who are wild cards.
Leverage Limited Discovery
FINRA describes itself as more ef昀椀cient and less complex
than litigating in court, and the volume of cases re昀氀ects how
central this forum has become to securities disputes. See FINRA,
Arbitration & Mediation, https://www.昀椀nra.org/arbitrationmediation (last visited Aug. 4, 2026). In 2024 alone, FINRA
closed 3,607 arbitration and mediation cases nationwide. Id.
FINRA arbitration is designed to move quickly. FINRA
does not provide for interrogatories, requests for admission, or
depositions as of right. Depositions, in particular, are “strongly
discouraged,” and require approval from the panel. See FINRA
Rule 12510. Instead of these tools, FINRA relies mainly on
document exchange, with the FINRA Discovery Guide
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