For many years now, FINRA has sought to implement the central precept of arbitration as an expeditious alternative to litigation for the elderly. This blog, Part 1, will provide an overview of FINRA's pronouncements on the subject as well as initiatives adopted by the SEC and NASAA. Parts 2 & 3 will discuss the defense bar's perspective and specific state laws on the subject, respectively.
These articles are intended to shed some light on the issues surrounding elderly customers in arbitration but they do not cover everything. If you have more specific questions, you can contact the experienced securities arbitration attorneys at the New York law firm of Kaufmann Gildin & Robbins LLP.
On its website since 2004, FINRA has explained its expedited proceedings for senior and seriously ill parties: For such cases, Dispute Resolution staff will endeavor, on an expedited basis, to:
- Complete the arbitrator selection process;
- Schedule the initial pre-hearing conference;
- Serve the Award; and,
- Determine whether the parties are interested in mediation.
"Arbitrators are encouraged," says FINRA, "consider the health and age of a party when:
- Scheduling hearing dates;
- Considering postponement requests; and,
- Setting discovery deadlines.
"Although FINRA Dispute Resolution staff cannot shorten the time requirements set forth in the Code of Arbitration Procedure, upon request, staff will expedite the administration of arbitration proceedings in matters involving senior or seriously ill parties. In such situations, staff will begin the arbitrator selection process, schedule the initial pre-hearing conference, and serve the final award as quickly as possible. By mutual agreement, parties are also free to reduce the time requirements contained in the Code. Staff will also determine promptly whether the parties are interested in mediation."
Arbitrator Sensitivity - "FINRA Dispute Resolution expects its arbitrators to be sensitive to the needs of senior or seriously ill parties when scheduling hearing dates, resolving discovery disputes, and determining the reasonableness of postponements. At the initial pre-hearing conference, counsel for a senior or seriously ill party should advise the arbitration panel of the party's desire for expedited hearings. When such a request is made, the arbitration panel is expected to press for hearing dates and discovery deadlines that will expedite the process, yet still provide a fair amount of time for case preparation."
The Regulators' Senior Initiative in 2006
In 2006, the SEC, FINRA and the North American Securities Administrators Association, Inc. ("NASAA") joined in an initiative toward protecting seniors from investment fraud and sales of unsuitable securities. This Senior Initiative entailed:
- Targeted examinations to detect abusive sales tactics aimed at seniors;
- Aggressive enforcement of state and federal securities laws in cases involving seniors; and
- Investor education and outreach.
The targeted examinations or "sweeps" addressed:
- "Free lunch" seminars targeting the seniors;
- Professional designations or titles that use the terms "senior" or "elderly" or imply that a person has special expertise, certification, or training in advising or servicing senior citizens;
- Early retirement seminars designed to entice older workers to retire early, liquidate their retirement funds, and invest them with a particular registered representative or firm;
- Sales of "Principal Only," "Interest Only" and inverse floater tranches of collateralized mortgage obligations to seniors; and
- Marketing life settlements to seniors.
These initiatives have made great strides in protecting elderly customers from a regulatory standpoint. Unfortunately, however, wrongdoing against senior customers remains an all-too-common practice in the brokerage industry. It is vital that seniors know all of their rights and the remedies afforded to them if they've been wronged by seeking advice from attorneys knowledgeable and experienced in this area of law.