Earlier this year I wrote about a startling Georgia decision finding that FINRA’s arbitrator selection process had been manipulated.  In response, FINRA announced that it would retain an independent firm to conduct an investigation. 

The results of that investigation are now publicly available in a Report from Christopher W. Gerold.  The report found that the outside firm “not believe that there was any agreement between Weiss and FINRA regarding the panels for Weiss’s cases.”  It did not find any “documentary evidence – including any emails or other material – suggested in any way that such an agreement existed.”

The Report also recommended a series of changes to improve FINRA’s dispute resolution system, including:

• Implementing ongoing, mandatory training for staff;
• Requiring written explanations, upon a party’s request, of approval or denial of a causal challenge to the selection of an arbitrator or an arbitrator removal by the DRS Director for cause;
• Conducting an updated external procedural review of the arbitrator selection algorithm to determine if it is still the most effective means for creating random, computer-generated arbitrator lists; and
• Updating the DRS Manual and rules to clarify staff roles and procedures, and to ensure consistency and transparency.

Hopefully FINRA will move swiftly to implement the Report’s recommendations.