PIABA PRESS RELEASE: FINRA'S EXTENDED DELAY OF ARBITRATION SERVICES LEAVING INVESTORS NO ACCESS TO JUSTICE (April 27, 2021) (the "PIABA Press Release")https://piaba.org/piaba-newsroom/piaba-press-release-finras-extended-delay-arbitration-services-dramatically-harminghttps://piaba.org/system/files/2021-04/Letter%20to%20FINRA%20regarding%20in-Person%20Hearings%20%28April%2026%2C%202021%29.pdf
The letter to FINRA Executive Vice President Richard Berry objects in strong terms to FINRA's decision to further extend the nationwide postponement of in-person hearings for all 69 of FINRA's hearing locations. Meyer points out that trial courts around the country and two major private arbitration forums resumed face-to-face proceedings some time ago or are doing so now. "PIABA conducted an analysis of the 20 largest FINRA hearing locations (by population) to learn whether courts in those jurisdictions were holding in-person civil jury trials. The results are overwhelming -- every single jurisdiction either is currently conducting in-person trials or will be doing so by July."Meyer also points out that the single health consultant FINRA is using to justify its shutdown has not provided any public report or metrics for the decision.But the biggest problem with the FINRA arbitration shutdown is that it unfairly benefits brokers and firms on the other side of the cases and prevents injured investors from seeking justice. The PIABA letter states: " . . . the indefinite delay in FINRA in-person hearings benefits the FINRA-member brokers and brokerage firms defending the arbitration claims brought by their customers in this forum."
Among the more infuriating aspects of FINRA's proposal is that those who FINRA has charged (and intends to charge) with misconduct are NOT responsible for the postponement of OHO/NAC hearings since March 16, 2020. COVID and only COVID has prompted the postponements. It is that horrific pandemic that has produced over 6 million cases with over 190,000 deaths in the United States. It is COVID that fosters FINRA's assertion that the "expanding backlog of cases, which if left unchecked, will compromise FINRA's ability to provide timely adjudicatory processes and fulfill its statutory obligations to protect investors and maintain fair and orderly markets." Yes, FINRA has a backlog of cases. And many restaurants are still unable to open. And movie theaters are still shuttered. And many folks cannot get into their offices. And many business have failed. And more men and women will die from the COVID. And . . . well, you know, we're all sort of dealing with this pandemic as best we can.We are asked to accept as an act of faith that "FINRA's protocol for conducting hearings by video conference will ensure that such hearings maintain fair process for the parties," and that FINRA will use a "high quality, secure and user-friendly video conferencing service." Clearly, FINRA doesn't get it. The issue of fair hearings is not one of bandwidth -- it is about due process and the right of confrontation at a self-regulatory-organization that has long proclaimed it is not subject to constitutional due process. Moreover, the mere fact that FINRA's proposal acknowledges that there will be a need to "provide thorough instructions, training and technical support to all hearing participants," clearly underscores that there are unique and additional considerations imposed upon already vulnerable respondents that require them to learn how to defend themselves through a newfangled conferencing system.. . .I am not an idiot and I am not oblivious to the consequences of FINRA's stalled docket. I represent defrauded investors. Also, I represent industry respondents who seek to clear their names or argue for reduced sanctions. Without question, FINRA has a mission and, at times, the public suffers when miscreants are allowed to ply their frauds until such time as a prosecutor or regulator can schedule a trial and obtain a verdict. I am not blind to that danger. On the other hand, the deck has been stacked for too long in favor of FINRA staff, and at some point a line must be drawn and traditional notions of fair play must matter.
"Rates of Covid-19 hospitalizations for children and adults under 50 reach their highest levels yet, CDC data shows" (CNN August 19, 2021)
https://www.cnn.com/2021/08/19/health/us-coronavirus-thursday/index.html"U.S. will begin wide distribution of Covid booster shots next month, saying vaccine protection wanes over time" (CNBC.com / August 18, 2021)https://www.cnbc.com/2021/08/18/covid-booster-shots-us-to-begin-wide-distribution-of-third-vaccine-doses-next-month.html" 'We are on fire': Five U.S. states set new records for Covid cases as hospitalizations rise" (CNBC August 16, 2021)https://www.cnbc.com/2021/08/16/we-are-on-fire-five-us-states-set-new-records-for-covid-cases-as-hospitalizations-rise-.html
In response to the COVID-19 global health crisis and the corresponding need to restrict in-person activities, FINRA filed proposed rule changes, SR-FINRA-2020-015 and SR-FINRA2020-027, which respectively provide temporary relief from some timing, method of service and other procedural requirements in FINRA rules and allow FINRA's Office of Hearing Officers ("OHO") and the National Adjudicatory Council ("NAC") to conduct hearings, on a temporary basis, by video conference, if warranted by the current COVID-19-related public health risks posed by an in-person hearing. In April 2021, FINRA filed a proposed rule change, SR-FINRA2021-006, to extend the expiration date of the temporary amendments in both SR-FINRA-2020- 015 and SR-FINRA-2020-027 from April 30, 2021, to August 31, 2021.While there are signs of improvement, much uncertainty remains for the coming months. The emergence of the Delta variant, dissimilar vaccination rates throughout the United States, and the uptick in transmissions in many locations indicate that COVID-19 remains an active and real public health concern. Based on its assessment of current COVID-19 conditions and the lack of a clear timeframe for a sustained and widespread abatement of COVID-19-related health concerns and corresponding restrictions, FINRA has determined that there is a continued need for temporary relief for several months beyond August 31, 2021. Accordingly, FINRA proposes to extend the expiration date of the temporary rule amendments in SR-FINRA-2020-015 and SRFINRA-2020-027 from August 31, 2021, to December 31, 2021.. . .[A]mong other things, the need for FINRA staff, with limited exceptions, to work remotely and restrict in-person activities - consistent with the recommendations of public health officials - have made it challenging to meet some procedural requirements and perform some functions required under FINRA rules. For example, working remotely makes it difficult to send and receive hard copy documents and conduct in-person oral arguments. The temporary amendments have addressed these concerns by easing logistical and other issues and providing FINRA with needed flexibility for its operations during the COVID-19 outbreak, allowing FINRA to continue critical adjudicatory and review processes in a reasonable and fair manner and meet its critical investor protection goals, while also following best practices with respect to the health and safety of its staff.FINRA staff, with limited exceptions, continue to work remotely to protect their health and safety. As indicated in its previous filings, FINRA has established a COVID-19 task force to develop a data-driven, staged plan for FINRA staff to safely return to working in FINRA office locations and resume other in-person activities. Based on its assessment of current COVID-19 conditions, FINRA does not believe the COVID-19-related health concerns necessitating this relief will meaningfully subside by August 31, 2021, and therefore proposes to extend the expiration date of the temporary rule amendments originally set forth in SR-FINRA-2020-015 from August 31, 2021, to December 31, 2021.