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Comment SR-FINRA-2009-075 Postponement Fees

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Public Investors Arbitration Bar Association 2010 Officers Scott R. Shewan President Peter J. Mougey Vice-President/ President-Elect December 21, 2009 Jenice L. Malecki Secretary Ryan K. Bakhtiari Elizabeth M. Murphy, Secretary Treasurer Securities and Exchange Commission 100 F Street 2010 Directors Washington, D.C. 20549-1090 Ryan K. Bakhtiari California Gail E. Boliver Re: File Number SR-FINRA-2009-075 Iowa Steven B. Caruso Dear Ms. Murphy: New York Jason Doss Georgia I write on behalf of PIABA (Public Investors Arbitration Bar Association) to comment on SR-FINRA-2009-075. The proposal involves two rule changes. Scott Ilgenfritz Florida Both relate to fees to be paid by parties in arbitration. The first would provide that William A. Jacobson the late postponement fee not be waived if the parties request a postponement New York within three business days before the scheduled hearing session. The second Richard A. Lewins would codify FINRA’s current internal practice of charging $450 per hearing Texas session for a single-arbitrator case with an unspecified damage claim. Jenice L. Malecki New York We oppose both rule changes. We understand that these rules are C. Thomas Mason Arizona purportedly intended to clarify existing practice. However, we oppose any rule Peter J. Mougey which would result in higher fees to the customer in a FINRA arbitration Florida proceeding. Kirk Reasonover ...
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Public Investors Arbitration Bar Association
2415 A Wilcox Drive
Norman, OK 73069
Phone: (405) 360-8776
Fax: (405) 360-2063
Toll Free: (888) 621-7484
Website:
www.PIABA.org
Email:
piaba@piaba.org
Public Investors Arbitration Bar Association
December 21, 2009
Elizabeth M. Murphy, Secretary
Securities and Exchange Commission
100 F Street
Washington, D.C.
20549-1090
Re:
File Number SR-FINRA-2009-075
Dear Ms. Murphy:
I write on behalf of PIABA (Public Investors Arbitration Bar Association)
to comment on SR-FINRA-2009-075.
The proposal involves two rule changes.
Both relate to fees to be paid by parties in arbitration. The first would provide that
the late postponement fee not be waived if the parties request a postponement
within three business days before the scheduled hearing session. The second
would codify FINRA’s current internal practice of charging $450 per hearing
session for a single-arbitrator case with an unspecified damage claim.
We oppose both rule changes. We understand that these rules are
purportedly intended to clarify existing practice.
However, we oppose any rule
which would result in higher fees to the customer in a FINRA arbitration
proceeding.
Moreover, we believe that the proposed rule changes are based upon a
faulty premise.
That premise (and the premise under which FINRA operates in
general) is that there should be a connection between whether (and in what
amount) a party pays a fee/penalty and whether (and in what amount) an arbitrator
receives a payment for the arbitrator’s service to the forum. This premise is faulty,
irrational, and cannot be justified by any of the purposes for which FINRA was
ostensibly created and authorized to resolve customer disputes.
We believe that it is reasonable for arbitrators to receive a fair payment for
their service and for their setting aside time in their schedules for the arbitration
hearings. It is not reasonable, or justifiable, to create a direct connection between
the amounts the arbitrators are paid and whether the litigants comply with FINRA
timelines, such as whether notice of postponement is provided within a certain
period of time.
2010 Officers
Scott R. Shewan
President
Peter J. Mougey
Vice-President/
President-Elect
Jenice L. Malecki
Secretary
Ryan K. Bakhtiari
Treasurer
2010 Directors
Ryan K. Bakhtiari
California
Gail E. Boliver
Iowa
Steven B. Caruso
New York
Jason Doss
Georgia
Scott Ilgenfritz
Florida
William A. Jacobson
New York
Richard A. Lewins
Texas
Jenice L. Malecki
New York
C. Thomas Mason
Arizona
Peter J. Mougey
Florida
Kirk Reasonover
Louisiana
J. Pat Sadler
Georgia
Scott R. Shewan
California
Brian N. Smiley
Georgia
Mark A. Tepper
Florida
Robin S. Ringo
Executive Director
Public Investors Arbitration Bar Association
2415 A Wilcox Drive
Norman, OK 73069
Phone: (405) 360-8776
Fax: (405) 360-2063
Toll Free: (888) 621-7484
Website:
www.PIABA.org
Email:
piaba@piaba.org
It is in the best interest of investors, and the public, that FINRA not impose
an impediment to resolution by penalizing the parties for settling the case at the last
minute. It is not uncommon for the parties to reach a resolution of their case just as
they are ready to go to hearing.
Settlements should be encouraged, even if they
happen at the eleventh hour.
This is the purpose of waiving postponement fees
when the reason for the postponement is the parties’ desire to engage in FINRA
mediation.
If late postponement fees are to be assessed, they should be assessed
against the industry respondent; after all, it was the respondent which could have
paid a settlement earlier and avoided the inconvenience to the panel.
With respect to the second proposed rule change, it does not seem to be fair
or reasonable to charge a hearing session fee of $450 for one arbitrator while a
charge of $1,000 is made for three arbitrators. However, a greater issue subsumes
this one. In a system where mandatory pre-dispute arbitration is the rule and where
the customer/investor has no choice of forum, the cost to access the forum should
be nominal.
The costs of the operation of the forum (including the payment to
arbitrators) should be borne by the entity that benefits the most from the SRO
arbitration system, i.e., FINRA and its member firms.
Even more to the point, postponement fees are an unfair burden on the
parties to an arbitration proceeding, especially the customer claimants who
generally have far less financial wherewithal to pay exorbitant fees for a
postponement.
Postponements can be necessitated for a number of reasons,
including unexpected illnesses and family emergencies.
It is unfair and
inappropriate to penalize the parties for matters which are completely outside their
control.
Postponement fees should be abolished altogether.
Thank you for your consideration of our concerns.
Very truly yours,
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Mr. Shewan’s Contact Information
Scott R. Shewan
Pape & Shewan, LLP
642 Pollasky Avenue
Suite 200
Clovis, California
93612
Telephone:
(559) 299-4341
Facsimile:
(559) 299-0920
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