Navigating E-Discovery in FINRA Arbitrations

When the Financial Industry Regulatory Authority (FINRA) holds arbitrations, it adheres to strict rules and regulations to ensure the process is completed fairly. As electronic discovery (e-discovery) tools become more pervasive and efficient in allowing the parties to access relevant documentation and evidence, FINRA is considering its approach to incorporating e-discovery capabilities into the arbitration process. Here’s the latest information from FINRA about the use of e-discovery during arbitration.

Evaluating Costs and Burdens

The e-discovery process can quickly escalate costs, especially when the matter is large in scope. Under FINRA’s Discovery Guide, a party may object to certain e-discovery requests on the grounds that the cost of production is “disproportionate to its probative value.” From there, the arbitrators must consider the relative usefulness or relevance of the documents in question; if they find they need access to these documents, they should first consider reducing the cost of production by limiting the time frame and scope of the e-discovery request.

Proportionality Matters

In most FINRA arbitration cases, e-discovery is often the most expensive component of the entire proceeding. As such, arbitrators must weigh the information’s potential value, relevance, and uniqueness before pursuing the production. The desire to keep the arbitration process moving forward efficiently highlights the importance of proportionality. This is particularly relevant when arbitrators request information not in the party’s possession, necessitating a subpoena to a third party. Before going this route, arbitrators and parties should discuss proportionality to determine whether this lengthy and costly request will yield relevant and crucial information.

How a Securities Law Attorney Can Help

As the COVID-19 pandemic continues to postpone in-person arbitration hearings or move them to an online forum, proportionality matters more than ever. FINRA urges all parties to address e-discovery issues as early on in the process as possible. If you are involved in an upcoming FINRA arbitration matter, reach out to an experienced securities law attorney to support you throughout this process. Your lawyer can help you navigate e-discovery matters and advocate for your best interests at all phases of arbitration. Give yourself the best chance at a successful outcome by contacting a trusted securities law attorney today.


Questions about an upcoming FINRA arbitration? Call Judex Law, LLC, today at (303) 523-4022 to discuss your concerns with a trusted securities law attorney.

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