The Discovery Process in FINRA Arbitration
After your FINRA arbitration claims have been filed, your case will proceed
to what is called the “discovery” process. It is during the
discovery process that the parties work to obtain facts and information
from the other parties in the case in order to support their claims and
defenses and prepare for the final arbitration hearing. FINRA has specific
rules governing the discovery process, including making discovery requests,
responding to discovery requests, objecting to discovery requests, and
resolving discovery disputes between parties, including issuing sanctions
against parties for discovery abuses.
With regard to discovery requests, FINRA has declared that certain documents
are presumptively discoverable in all customer disputes. This includes
a list of documents that brokerage firms are expected to produce in customer
disputes, as well as a separate list of documents that investors are expected
to produce. Such documents include new account forms, any contracts signed
by the customer, notes maintained by the broker or brokerage firm, emails
between the parties, and the customer’s tax returns.
When it comes to responding to discovery requests, FINRA states that,
[A] party may object to a discovery request if it asks the party to provide
documentation and information that a party believes is, for example, overly
burdensome, not relevant to the case, or involves confidential or privileged
information. Objecting to a discovery request means the party that is
the subject of the request argues that the party does not have to provide
the documentation or information requested. The objection must clearly
state in writing the request to which the party is objecting and why,
and send the written objection to all parties in the case.
If the parties cannot agree on their own how to resolve any discovery dispute,
then the party who still wants more documents or information may make
a motion to compel the reluctant party to produce the requested documents.
In the motion, the requesting party explains to the arbitrators why the
discovery is relevant and necessary to the case and asks the panel to
issue an order compelling production. The arbitrators may schedule a hearing
before deciding the motion.
If a party fails to produce documents or information required by a discovery
order, the arbitrators may issue sanctions against that party. Sanctions
could include assessing fees or penalties, including attorneys' fees;
prohibiting a party from introducing evidence at the hearing; and even
dismissing a claim, defense, or even the entire case.
It is critically important that you have experienced counsel representing
in your FINRA arbitration case who understands the intricacies of FINRA’s
rules and are capable of leading you successfully through the process.
If you have questions about the FINRA discovery process, please
give one of our experienced arbitration lawyers a call today.