FINRA Tries To Shut Down "Collective Action" Arbitration For Frustrated Brokerage Firm Employees

Monday, July 25, 2011 06:29
FINRA Tries To Shut Down

For years, the industry arbitrators have refused to consider hearing group grievances brought by brokerage firm employees looking for better work conditions. This may only make it easier for those cases to go to court.


This Website Is For Financial Professionals Only


FINRA has proposed a new rule that would formally ban collective actions -- currently a gray area -- from its arbitration system as well as already-prohibited class actions.


"Class action" automatically incorporates everyone who might be covered by a legal dispute, forcing them to opt out of the case. 


"Collective actions" require people to actively opt in.


FINRA has traditionally refused to hear complaints from brokers about work conditions that follow either format, but only class actions have been formally banned.


However, disputes surrounding the Fair Labor Standards Act and similar federal anti-discrimination rules are technically collective actions by definition.


At the moment, district courts are bouncing these cases back to FINRA, arguing that collective action is not prohibited in the arbitration system.


If FINRA closes the loophole, disgruntled brokerage employees will have no choice but to go to court to fight for their rights -- as many did several years ago, wringing costly concessions from the wirehouses.





Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.