Finra Hires Law Firm to Review
According to an announcement by the regulator, the Financial Industry Regulatory Authority hired an outside firm to review its selection procedures for arbitrators in a controversial case.
Finra, who previously denied any flaws in its process hired Lowenstein Sandler lawyers after harsh criticism from plaintiffs lawyers and politicians. This was based on a Georgia judge's decision to vacate an award in favour of Wells Fargo. Judge said Finra and Wells Fargo had a secret agreement to strike arbitrators from a neutral listing and challenged the fairness of this process.
Finra Hires Law Firm to Review
Public Investors Advocate Bar Association reiterated the concerns of the state court judge. They called for an "immediate investigation" by Securities and Exchange Commission and hearings at Congress. Senator Elizabeth Warren (D.Mass.) also supported the request. Rep. Katie Porter (D.Calif.), in a February 10 letter to Robert Cook.
Cook stated that the company takes this matter seriously in a statement to announce the hiring. "FINRA recognizes how important it is to maintain trust in the system, and is committed ensuring that the DRS arbitration forum operates in a fair-and neutral manner."
Finra will publish the results of the review, he stated.
Fulton County Superior Court Judge Belinda E. Edwards, Atlanta, had based her decision to vacate the award partly on the grounds that Finra administrators had permitted Wells Fargo to "manipulate the arbitrator selection process", according to her opinion.
Edwards wrote that Edwards allowed one lawyer to secretly redline the neutral list and called into question the fairness of the arbitral forums in his January 25 ruling.
A Finra spokesperson denied that any agreement had been made between the organization's representatives and car wreck attorney, a Wells' outside lawyer, at that point. Terry Weiss is a partner at Maynard Cooper & Gale, Atlanta.
AdvisorHub was informed by a spokeswoman that she had reviewed all cases involving Terry Weiss' counsel. She stated that none of the three arbitrators involved in the cases were excluded from the ranking lists or removed. "As neutral administrators, we strive to make FINRA forum fairest and most efficient possible.
We also stand behind the integrity in our neutral list selection process.
Christopher Gerold, a Lowenstein partner and former chief of New Jersey Bureau of Securities' Securities Litigation and Corporate Investigations & Integrity Practice Groups, will be leading the investigation. Finra stated that Gerold, who was also president of the North American Securities Administrators Association (NASA), will lead the investigation.
NEW YORK----( BUSINESS WIRED)--National fraud lawyers KlaymanToskes hereby approves the Financial Industry Regulatory Authority (FINRA) decision to audit its arbitration selection process. Independent audits will be performed to determine if FINRA's Dispute Resolution Services adhered to its rules, policies and procedures. The self-regulatory organisation intends making the audit results available once it is completed.
Securities attorney Lawrence L. Klayman Esq. says that investors deserve fair opportunities when they bring their disputes against brokerage firms. FINRA's promise to investigate the troubling allegations made by the Georgia court will improve access to justice. KlaymanToskes believes that FINRA arbitration is the best way for investors to recover their claims.
FINRA's announcement comes after a Georgia state court's January 2022 Order that overturned an arbitration award for Wells Fargo (NYSE : WFC). In the case in which an investor had accused Wells Fargo, Wells Fargo and its lawyers manipulated FINRA’s arbitrator selection process. The manipulation was allegedly done through a secret agreement between Wells Fargo and FINRA's Dispute Resolution Services. This arrangement allegedly prevented certain arbitrators from being chosen for the decision-making panel.
KlaymanToskes, a national securities law firm that specializes in securities arbitration for institutional and retail investors worldwide in complex and large securities cases, is a leader in this field. KlaymanToskes has recouped more than $228,000,000 for investors in FINRA arbitrations. KlaymanToskes is available in California, Florida and New York.