New Rule May Make it Easier for Small Investors to Recover Investment Losses


Effective July 23, 2012, the Financial Industry Regulatory Authority (FINRA) rule relating to Simplified Arbitration, Rule 12800, will apply to arbitrations involving $50,000 or less, exclusive of interest and expenses. The previous cap was $25,000. This change should make it easier for investors to recover who have suffered relatively smaller losses as the result of misconduct or wrongdoing.

Simplified arbitration provides a relatively streamlined, lower-cost way to hear claims that might otherwise not be economically feasible for claimants to bring. Generally, a single arbitrator decides the case based entirely upon the paper submissions filed by the parties, without an in-person hearing or telephonic conference. While the rule provides that the parties may obtain discovery, and the arbitrators have discretion to require parties to produce documents responsive to relevant portions of FINRA’s document production lists, in practice, discovery is usually not undertaken.

Parties and their attorneys who use simplified arbitration should take care to attach to the Statement of Claim, and explain the significance of, all relevant documents, so that the arbitrator has everything needed to decide the case.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.