SEC Approves Amendments to Align FINRA Rules With Statutes That Invalidate Predispute Arbitration Agreements for Whistleblower Disputes (FINRA Regulatory Notice)

FINRA Reg. Notice 12-21

The SEC approved amendments to FINRA Rule 13201 of the Code of Arbitration Procedure for Industry Disputes (Industry Code) to provide that a dispute arising under a whistleblower statute that prohibits the use of predispute arbitration agreements is not required to be arbitrated under the Industry Code. Parties may arbitrate such a dispute only if they have agreed to arbitrate it after the dispute arose. The rule change aligns the Industry Code with statutes that invalidate predispute arbitration agreements for whistleblower disputes. The rule change also makes a conforming change to FINRA Rule 2263 (Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4).

Effective Date: May 21, 2012

Cross References: FINRA Rules 1010, 2263 and 13201; SEC Release 34-66575, 77 FR 15824; Dodd-Frank Act, Public Law 111-203; Dodd-Frank Section 922(c)(2).

For more information about this document, you may contact one of the following Cadwalader attorneys: Steven D. Lofchie.