The Financial Industry Regulatory Authority (FINRA), which regulates brokerage firms and their associated persons in the United States, also sponsors the largest forum for securities dispute resolution in the country. A majority of brokerage firms today require their customers to enter into an agreement which, among other things, requires that customers who have a dispute with the firm bring their claim in FINRA’s arbitration forum rather than in civil court.
The FINRA Code of Arbitration for Customer Disputes (the Code) Rule 12208 addresses representation of parties in FINRA arbitration proceedings. As it currently stands, individual parties may represent themselves, and persons with bona fide legal authority may represent partnerships, corporations or limited liability companies. At any stage of a FINRA arbitration proceeding, all parties have the right to be represented by an attorney at law in good standing and admitted to practice before the U.S. Supreme Court or the highest court of any U.S. state, the District of Columbia, or any commonwealth, territory or possession of the United States, unless—and this is key—state law prohibits such representation. Rule 12208 also permits parties to be represented by a non-attorney representative (NAR), unless: (1) state law prohibits such representation; (2) the person is currently suspended or barred from the securities industry in any capacity; or (3) the person is currently suspended from the practice of law or disbarred.
