The Financial Industry Regulatory Authority, Inc. (“FINRA”) recently filed with the Securities and Exchange Commission (“SEC” or “Commission”) a proposed rule change to amend the By-Laws of FINRA Dispute Resolution, Inc. (By-Laws) to clarify that services provided by mediators, when acting in such capacity and not representing parties in mediation, should not cause the individuals to be classified as Industry Members under the By-Laws.

Mediation is an important step in the dispute resolution process.  It is a process whereby the litigants appear before an independent third party generally referred to as a “mediator” to attempt to resolve, through a negotiated agreement, their issues. The mediator is usually trained and certified in the mediation process.  Mediation can be commenced either before or during a pending action be it a lawsuit or an arbitration.  Currently, in pending arbitration cases, mediation is usually voluntary.  In pending court actions, mediation is generally mandated before the actual trial of the matter can take place.

For the most part, mediation has a structure, timetable and dynamics that “ordinary” negotiation lacks. The process is private and confidential. The mediator acts as a neutral third party and facilitates rather than directs the process.

Please keep in mind that the above description of the mediation process is being provided for educational purposes only and is not designed to be complete in all material respects.  It should not be relied upon as providing legal or investment advice.  If you have any questions concerning the contents of this post, you should contact a qualified professional.

To review a copy of the proposed rule change, please follow the highlighted link:  http://www.finra.org/web/groups/industry/@ip/@reg/@rulfil/documents/rulefilings/p156502.pdf

To review the status of all recently proposed FINRA Rule filings, please follow this highlighted link:  http://apps.finra.org/Rules_and_Regulations/rulefilings/1/default.aspx

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