12100. Definitions
Unless otherwise defined in the Code, terms used in the Code and interpretive material, if defined in the FINRA By-Laws, shall have the meaning as defined in the FINRA By-Laws.
(a) Arbitrator and Mediator Portal
The term "Arbitrator and Mediator Portal" means the web-based system that allows invited arbitrators and mediators to access a secure section of FINRA's website to submit documents and information and view their arbitration and mediation case information and documents.
(b) Associated Person
The term "associated person" or "associated person of a member" means a person associated with a member, as that term is defined in paragraph (w).
(c) Award
An award is a document stating the disposition of a case.
(d) Board
The term "Board" means the Board of Directors of FINRA Regulation.
(e) Claim
The term "claim" means an allegation or request for relief.
(f) Claim Notification Letter
The term "Claim Notification Letter" means the notice provided by the Director to respondent(s) that they have been named as a party in a statement of claim. The notice will provide information about accessing the Party Portal to obtain a copy of the statement of claim filed by the claimant(s) and information about the arbitration, including the hearing location selected by the Director and the deadline for filing a statement of answer.
(g) Claimant
The term "claimant" means a party that files the statement of claim that initiates an arbitration under Rule 12302.
(h) Code
The term "Code" means the Code of Arbitration Procedure for Customer Disputes. For disputes involving only industry parties, see the Code of Arbitration Procedure for Industry Disputes.
(i) Counterclaim
The term "counterclaim" means a claim asserted against a claimant by a respondent.
(j) Cross Claim
The term "cross claim" means a claim asserted by a respondent against another already-named respondent.
(k) Customer
A customer shall not include a broker or dealer.
(l) Day
Except as otherwise provided, the term "day" means calendar day. If a deadline specified in the Code falls on a Saturday, Sunday or any FINRA holiday, the deadline is extended until the next business day. If a party receives pleadings or other documents on a Saturday, Sunday or any FINRA holiday, the date of receipt shall be the next business day.
(m) Director
The term "Director" means the Director of FINRA Dispute Resolution Services. Unless the Code provides that the Director may not delegate a specific function, the term includes FINRA staff to whom the Director has delegated authority.
(n) Dispute
The term "dispute" means a dispute, claim or controversy. A dispute may consist of one or more claims.
(o) Hearing
The term "hearing" means the hearing on the merits of an arbitration under Rule 12600.
(p) Hearing Session
The term "hearing session" means any meeting between the parties and arbitrator(s) of four hours or less, including a hearing or a prehearing conference.
(q) Inactive Member
The term “inactive member” means a member as defined in paragraph (s) of this rule:
(1) whose membership is terminated, suspended, cancelled or revoked;
(2) that has been expelled or barred from FINRA; or
(3) that is otherwise defunct.
(r) Inactive Associated Person
The term “inactive associated person” means a person associated with a member as defined in paragraph (w) of this rule whose registration is revoked, cancelled, or suspended, who has been expelled or barred from FINRA, or whose registration has been terminated for a minimum of 365 days.
(s) Member
For purposes of the Code, the term "member" means any broker or dealer admitted to membership in FINRA, whether or not the membership has been terminated, suspended, cancelled, revoked, the member has been expelled or barred from FINRA, or the member is otherwise defunct; and any broker or dealer admitted to membership in a self-regulatory organization that, with FINRA consent, has required its members to arbitrate pursuant to the Code and to be treated as members of FINRA for purposes of the Code, whether or not its membership has been terminated, suspended, cancelled, revoked, the member has been expelled or barred from its self-regulatory organization, or the member is otherwise defunct.
(t) Non-Public Arbitrator
The term "non-public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is disqualified from service as a public arbitrator under paragraph (aa).
(u) Panel
The term "panel" means the arbitration panel, whether it consists of one or more arbitrators.
(v) Party Portal
The term "Party Portal" means the web-based system that is accessible by arbitration and mediation parties and their representatives. The Party Portal allows invited participants to access a secure section of FINRA's website to submit documents and view their arbitration and mediation case information and documents.
(w) Person Associated with a Member
The term "person associated with a member" means:
(1) A natural person who is registered or has applied for registration under the Rules of FINRA; or
(2) A sole proprietor, partner, officer, director, or branch manager of a member, or other natural person occupying a similar status or performing similar functions, or a natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by a member, whether or not:
(A) Any such person is registered or exempt from registration with FINRA under the By-Laws or the Rules of FINRA; or
(B) Any such person’s registration is revoked, cancelled, or suspended, the person has been expelled or barred from FINRA, or the person’s registration has been terminated for a minimum of 365 days.
For purposes of the Code, a person formerly associated with a member is a person associated with a member.
(x) Pleadings
A pleading is a statement describing a party's causes of action or defenses. Documents that are considered pleadings are: a statement of claim, an answer, a counterclaim, a cross claim, a third party claim, a separate document requesting expungement, and any replies.
(y) Prehearing Conference
The term "prehearing conference" means any hearing session, including an Initial Prehearing Conference, that takes place before the hearing on the merits begins.
(z) Pro Se
For purposes of the Code, the term "pro se" refers to a party that is not represented by an attorney or others during an arbitration or mediation.
(aa) Public Arbitrator
The term "public arbitrator" means a person who is otherwise qualified to serve as an arbitrator, and is not disqualified from service as an arbitrator, as enumerated by any of the criteria below.
Permanent Disqualifications Based on a Person's Own Activities
(1) A person shall not be designated as a public arbitrator who is, or was, associated with, including registered through, under, or with (as applicable):
(A) a broker or a dealer (including a government securities broker or dealer or a municipal securities broker or dealer); or
(B) the Commodity Exchange Act or the Commodity Future Trading Commission, or a member of the National Futures Association or the Municipal Securities Rulemaking Board; or
(C) an entity that is organized under or registered pursuant to the Securities Exchange Act of 1934, Investment Company Act of 1940, or the Investment Advisers Act of 1940; or
(D) a mutual fund or a hedge fund; or
(E) an investment adviser.
(2) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time annually, to any entities listed in paragraph (aa)(1) or to any persons or entities associated with any of the entities listed in paragraph (aa)(1).
(3) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time annually to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry.
(4) A person shall not be designated as a public arbitrator, who was, for a total of 15 years or more, an employee of a bank or other financial institution who effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities.
Temporary Disqualifications Based on a Person's Own Activities
(5) A person shall not be designated as a public arbitrator who is employed by, or is a director or officer of, an entity that directly or indirectly controls, is controlled by, or is under common control with, any partnership, corporation, or other organization that is engaged in the financial industry unless the affiliation ended more than five calendar years ago.
(6) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to any entities listed in paragraph (aa)(1) or to any persons or entities associated with any of the entities listed in paragraph (aa)(1) unless the calendar year ended more than five calendar years ago.
(7) A person shall not be designated as a public arbitrator who is an attorney, accountant, expert witness or other professional who has devoted 20 percent or more of his or her professional time, in any single calendar year, to representing or providing services to parties in disputes concerning investment accounts or transactions, or employment relationships within the financial industry unless the calendar year ended more than five calendar years ago.
(8) A person shall not be designated as a public arbitrator if the person is an employee of a bank or other financial institution and the person effects transactions in securities, including government or municipal securities, commodities, futures, or options or supervises or monitors the compliance with the securities and commodities laws of employees who engage in such activities unless the affiliation ended more than five calendar years ago.
Temporary Disqualifications Based on the Activities of Others at a Person's Employer
(9) A person shall not be designated as a public arbitrator who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from any entities listed in paragraph (aa)(1) or to any persons or entities associated with any of the entities listed in paragraph (aa)(1), or from a bank or other financial institution where persons effect transactions in securities including government or municipal securities, commodities, futures, or options. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
(10) A person shall not be designated as a public arbitrator, who is an attorney, accountant, or other professional whose firm derived $50,000 or more, or at least 10 percent of its annual revenue, in any single calendar year during the course of the past two calendar years, from individual and/or institutional investors relating to securities matters. A person whom FINRA would not designate as a public arbitrator under this subparagraph shall also not be designated as a public arbitrator for two calendar years after ending employment at the firm.
Temporary Disqualification Based on the Financial Industry Affiliation of an Immediate Family Member
(11) A person shall not be designated as a public arbitrator if his or her immediate family member is an individual whom FINRA would disqualify from serving on the public arbitrator roster. If the person's immediate family member ends the disqualifying affiliation, or the person ends the relationship with the individual so that the individual is no longer the person's immediate family member, the person may, after two calendar years have passed from the end of the affiliation or relationship, be designated as a public arbitrator.
For purposes of this rule, the term immediate family member means:
(A) a person's spouse, partner in a civil union, domestic partner, parent, stepparent, child, or stepchild;
(B) a member of a person's household;
(C) an individual to whom a person provides financial support of more than 50 percent of his or her annual income; or
(D) a person who is claimed as a dependent for federal income tax purposes.
For purposes of the public arbitrator definition, the term "revenue" shall not include mediation fees received by mediators who are also arbitrators, provided that the mediator acts in the capacity of a mediator and does not represent a party in the mediation.
(bb) Respondent
The term "respondent" means a party against whom a statement of claim or third party claim has been filed. A claimant against whom a counterclaim has been filed is not a respondent for purposes of the Code.
(cc) Statement of Claim
The term "statement of claim" means the initial or amended claim filed by the party or parties initiating the arbitration.
(dd) Submission Agreement
The term "Submission Agreement" means the FINRA Submission Agreement. The FINRA Submission Agreement is a document that parties must sign at the outset of an arbitration in which they agree to submit to arbitration under the Code.
(ee) Third Party Claim
The term "third party claim" means a claim asserted against a party not already named in the statement of claim or any other previous pleading.
(ff) Unnamed Person
For purposes of Rule 12800 and Rule 12805, the term “unnamed person” means an associated person, including a formerly associated person, who is identified in a Form U4, Form U5, or Form U6 as having been the subject of an investment-related, customer-initiated arbitration that alleged that the associated person or formerly associated person was involved in one or more sales practice violations, but who is not named as a respondent in the arbitration.
| Amended by SR-FINRA-2022-024 eff. Oct. 16, 2023 Amended by SR-FINRA-2022-022 eff. July 28, 2022. Amended by SR-FINRA-2020-039 eff. Oct. 29, 2020. Amended by SR-FINRA-2019-027 eff. June 29, 2020. Amended by SR-FINRA-2017-025 eff. Oct. 9, 2017. Amended by SR-FINRA-2016-029 eff. April 3, 2017. Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015. Amended by SR-FINRA-2014-028 eff. June 26, 2015. Amended by SR-FINRA-2013-003 eff. July 1, 2013. Amended by SR-FINRA-2009-041 eff. Jan. 18, 2010. Amended by SR-FINRA-2008-031 eff. Feb. 9, 2009. Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008. Amended by SR-NASD-2007-021 eff. June 9, 2008. Amended by SR-NASD-2007-038 eff. June 14, 2007. Adopted by SR-NASD-2003-158 eff. April 16, 2007. Selected Notices to Members: 07-07, 08-22, 08-57, 09-04, 09-74, 13-21, 15-18, 16-04, 17-03, 17-29, 20-11, 23-12. |
- Regulatory Notice 17-42December 06, 2017
- Regulatory Notice 17-33October 18, 2017
- Regulatory Notice 17-29October 04, 2017
- Regulatory Notice 15-18May 27, 2015
- Regulatory Notice 13-21June 03, 2013
- Regulatory Notice 09-74December 18, 2009
- Regulatory Notice 09-04January 09, 2009