Wednesday’s Word: Venue – FINRA Style

By Hector Rojas, Fall 2016 Student Intern

U.S. Hearing Locations

So, you have a potential claim against your broker. Now what? Well, one of the preliminary matters you will have to determine before filing your claim is where the hearing (arbitration) will take place. This is known as venue, or as FINRA refers to it, the hearing location. FINRA has many hearing locations throughout the country; therefore, determining the correct hearing location is crucial. The general rule is that the hearing location closest to the customer’s residence at the time of the events giving rise to the dispute will be where the hearing takes place. See FINRA Rule 12213. FINRA staff has interpreted the term “giving rise to the dispute” to mean the place where the claimant (customer) resides at the time the arbitration action is filed.

For example, say you are a customer living in Valdosta, Georgia and are in an arbitration proceeding. According to the rule above, your arbitration will occur at the Jacksonville hearing location. Although the Jacksonville hearing location is located in a completely different state (Florida), it is closer to your residence than the hearing location in Atlanta, Georgia. Generally, this is how the hearing location will be determined.

In 2010, however, FINRA amended this rule. The rule now allows a customer to request the hearing location in the state where the customer resided at the time of the events giving rise to the dispute, if the hearing location closest to the customer’s residence is in a different state. Taking the example above, the amended rule would allow you to select the Atlanta, Georgia hearing location, even though the closest hearing location to the your residence is the Jacksonville location. How kind of them to do that!

This is how hearing locations for arbitrations that take place in the United States are determined.

Foreign Hearing Locations

The rule for foreign hearing locations (locations outside the U.S.) is also relatively simple. FINRA allows the parties to a dispute to have their hearing in a foreign hearing location, however the Director of FINRA Dispute Resolution and all parties must agree. See FINRA Rule 12213(b). If the parties wish to have foreign arbitrators, the arbitrators must meet FINRA standards and training. Additionally, the parties will be required to pay an additional surcharge for each day of hearing held in a foreign hearing location.

So, there you go, venue FINRA style.

For more information about hearings and hearing locations click here and here.