The Public Investors Advocate Bar Association (PIABA) condemns Financial Industry Regulatory Authority (FINRA) for implementing sweeping changes to new arbitrator qualifications without consulting investor advocates or providing an opportunity for public comment. The rules went into effect May 24, 2025, with PIABA notified days after implementation.
Adam Gana, president of PIABA and managing partner of Gana Weinstein LLP, said: “FINRA’s decision to overhaul arbitrator qualifications in the dead of night—without transparency, notice, or stakeholder input—is unacceptable. Had PIABA been consulted, we would have made clear that these changes shrink the public arbitrator pool and harm investors. Instead, FINRA took a fly-by-night approach that appears aimed at appeasing the financial industry at the expense of fairness.”
The changes raise the educational standard for arbitrators from 2 years of college-level credits to a 4-year degree. The employment requirement changed from “5 years of paid business and/or professional experience” to “5 years of professional work experience,” with professional work experience defined as employment that requires advanced training and education, such as a doctor, lawyer, teacher, accountant, registered representative, investment adviser, etc.
PIABA raises the following major issues related to qualification changes:
- No Notice or Consultation: FINRA made these changes unilaterally, without consulting PIABA or any investor advocacy organizations.
- Reduced Arbitrator Diversity: The changes drastically limit who can serve as a public arbitrator, excluding experienced small business owners and other qualified professionals. FINRA’s industry-leaning unilateral changes will make the arbitrator pool far less like any typical jury and likely result in increased favoritism for the securities industry.
- Shrinking an Already Strained Pool: With the forum already facing a shortage of public arbitrators, this move further depletes available resources, delaying justice for harmed investors.
- Industry Appeasement: The timing and nature of the rule change suggest FINRA may be responding to recent investor victories that displeased industry members.
- No Opportunity for Public Input: PIABA calls on FINRA to immediately open a public comment period and reconsider the rule changes and consider stakeholder feedback.
“These new standards arbitrarily disqualify people with decades of relevant life and business experience who could offer fair, real-world perspectives to the arbitration process,” Gana added. “If FINRA is serious about investor protection and arbitration fairness, it must reverse course and invite public input immediately.”
Arbitration fairness is already a major issue for investors, and the new arbitrator qualification requirements may exacerbate existing problems. Historically, the financial industry has commanded an overwhelming and disproportionate 70% win rate in customer arbitration cases. Even when investors do win, 30% of FINRA’s arbitration awards go unpaid.
