Every quarter, the Financial Industry Regulatory Authority (FINRA) releases the latest set of statistics relating to its Dispute Resolution Services (DRS). FINRA recently celebrated its 85th anniversary by reminding the public that it has “created safer markets and built investor trust through effective regulation of member firms, evolving technology to meet the changing demands of the markets and a commitment to continuous innovation.” One of FINRA’s roles is to collect and share statistics about arbitration case filings and trends to keep the public informed about such matters. This month, FINRA released the latest set of dispute resolution statistics that took place between January and August 2024. Overall, the data indicates a “24 percent decrease compared to cases filed during the same eight-month period in 2023 (from 2,181 cases in 2023 to 1,706 cases in 2024).” Additionally, “Customer-initiated claims decreased by 10 percent through August 2024, as compared to the same period in 2023.” Individual financial advisors and securities firms are eager to interpret these trends, as they could reflect the impact of FINRA’s recently updated and revised rule changes affecting the expungement request process. There is some speculation that these rule changes have cracked down on the number of successful expungement requests, which has led to fewer case filings overall.
If you have questions or concerns about the expungement request process or how to seek the removal of unfair customer dispute information from your BrokerCheck profile, enlisting the guidance of a highly experienced and trusted securities law attorney can help you determine the most strategic path forward. Let’s take a closer look at what these recently released statistics could mean for the financial industry.
Interpreting FINRA’s Virtual Arbitration Hearing Statistics
In the wake of the COVID-19 pandemic, FINRA offered alternatives to in-person arbitration hearings. As of the end of August, FINRA reports that 2,449 arbitration cases have held one or more hearings via video conferencing (i.e., Zoom). This number includes 799 customer cases and 1,650 industry cases. From this data, it’s clear that virtual hearings remain a popular and convenient option for many cases, even if this format is only used one or two times within the context of a given case. Moreover, the demand for virtual arbitration hearings remains strong—822 joint motions for virtual hearings have been filed (361 in customer cases, 461 in industry cases) between January and August 2024.
FINRA Arbitration Case Filings Have Declined
The total number of new cases filed between January and August 23 was 2,181 (58 percent customer cases, 42 percent intra-industry cases). This marked an increase in the total number of cases filed during the same period in 202 (64 percent of which were customer cases and 36 percent were intra-industry cases). However, this trend quickly reversed course, with the total number of new cases filed between January and August 2024 falling to 106 (67 percent customer cases and 33 percent intra-industry cases). A larger number of cases were closed (2,163 in 2024, as compared to 1,893 in 2023), and fewer cases remain open in 2024 (2,958 cases, as compared to 3,356 open cases in 2023). Moreover, the turnaround time (measured in months) fell from 15.5 months to 12.2 months between 2023 and 2024.
Most Popular Controversy Types in FINRA Arbitrations
Generally speaking, the most commonly cited controversy types at the heart of arbitrations remained fairly steady from 2023 to 2024. Below is an overview of the top controversy types in customer arbitrations, followed by those involved in intra-industry arbitrations.
Top Customer Arbitration Controversy Types
Breach of Fiduciary Duty remained the top controversy type in customer arbitrations for both 2023 (1,016 cases) and 2024 (899 cases). The second and third most popular controversy types were Negligence (816 cases in 2024, 928 cases in 2023) and Failure to Supervise (774 cases in 2023, 750 cases in 2024). There were slightly more customer arbitration cases concerning Misrepresentation in 2024 (740 cases) than in 2023 (725). Breach of Contract cases were more common in 2023 (750 cases) than in 2024 (712 cases). Other top controversy types in customer arbitration cases between January and August 2024 included Suitability (622 cases), Omission of Facts (611 cases), Fraud (475 cases), Breach of Regulation BI (295 cases), Violation of Blue Sky Laws (252 cases), Manipulation (224 cases), Elder Abuse (119 cases), Unauthorized Trading (86 cases), Errors-charges (57 cases), and Transfer (53 cases). It’s important to note that a single arbitration case can include several types of controversies.
Most Common Intra-Industry Controversy Types
The most frequently cited controversy types involved in intra-industry cases remained steady from 2023 to 2024. Compensation cases were slightly more common than cases involving Libel or Slander on Form U-5 in 2024 than they were during the same eight-month period in 2023. The top controversies in intra-industry arbitrations as of August 2024 are as follows: Breach of Contract (186 cases); Promissory Notes (118 cases); Compensation (101 cases); Libel or Slander on Form U-5 (67 cases); Libel, Slander, or Defamation (52 cases); Wrongful Termination (43 cases); Commissions (41 cases); Discrimination or Harassment (17 cases); Breach of Fiduciary Duty (16 cases); Raiding Disputes (10 cases); Negligence (7 cases); Misrepresentation (6 cases); Fraud (6 cases); Indemnification (5 cases); and Whistleblower (5 cases). One arbitration case may involve more than one controversy type.
Contact a Skilled FINRA Arbitration Lawyer Today
As a securities and financial industry professional, you are well aware of the ever-shifting and rapidly evolving landscape of regulations, rules, and laws. Unfortunately, some of FINRA’s recently approved and enacted rule changes affect the expungement request process, which may make it more difficult for a financial advisor to have unfair, baseless, or even downright false customer dispute information removed from the Central Registration Depository (CRD) and BrokerCheck. If you are struggling with unfair allegations of wrongdoing, reach out to a highly qualified securities law firm to discuss your options. With a knowledgeable and experienced FINRA arbitration lawyer in your corner, you can make more informed decisions with greater certainty and confidence. Contact the financial industry’s go-to FINRA compliance law firm, Judex Law, LLC, today to get started.
If you have questions about a securities law matter, such as arbitration, FINRA complaint expungement, securities compliance, state regulatory defense, disclosures, or another issue, call Judex Law, LLC, at (303) 523-4022 to get started with a trusted and friendly securities law attorney.
