Commencing an Arbitration Proceeding - Chapter 6 - Securities Arbitration: Practice and Forms - Second Edition

This chapter describes the process of commencing a securities arbitration where the amount in controversy exceeds the small-case jurisdictional threshold of $50,000. FINRA Rules 12800 and 13800 of the Customer and Industry Codes of Arbitration Procedure provide streamlined arbitration procedures for claimants seeking damages of $50,000 or less. The American Arbitration Association’s (AAA), streamlined small-claims rules apply to disputes involving less than $75,000 exclusive of interest and arbitration costs.

§ 6.02 Representation Issues

[1]—Introduction

The AAA permits parties to appear in pro per, through an attorney, or “other authorized representative.” FINRA recognizes that a party may be represented by an attorney or non-attorney. In recent years representation issues have taken a more prominent role in arbitrations.

[2]—Non-Attorney Representation

Beginning in the 90’s, non-attorney organizations, comprised of persons familiar with the securities industry, sprouted up on the coasts and soon spread nationwide. Both AAA and SICA examined the nonattorney representation organizations. The SICA Report made a number of recommendations, including proposing rules prohibiting barred or suspended securities professionals or disbarred attorneys from representing parties, requiring certifications that the individual was not in the prohibited class, and also provide educational efforts to inform customers and parties of the pros and cons of non-attorney representation. With the exception discussed in the next section, no further action has been taken by FINRA or the AAA on the topic and non-attorney organizations continue to appear in arbitration proceedings, albeit on a more limited scale.