Effective July 9, 2012, FINRA will modify its arbitration rules to explicitly state that collective action claims brought under the Fair Labor Standards Act (FLSA), the Age Discrimination in Employment Act (ADEA), or the Equal Pay Act of 1963 (EPA) may not be arbitrated under FINRA’s Code of Arbitration for Industry Disputes. The rule had already prohibited arbitration of class action claims under the Code – this change makes it clear that this prohibition extends to the specified collective action claims as well.
Other rules of procedure were added that govern the determination of whether a specific dispute is a collective claim, and thus not subject to arbitration. These rules are similar to the existing rules for determining whether a dispute is a class action claim. These rules include:
-Someone who opts in to a collective action claim cannot settle the same dispute using arbitration.
-If there is a disagreement over whether a claim is part of a collective action, a panel will review the issue.
-Members and associated persons may not enforce arbitration agreements against members of certified or putative collective actions in relation to any of the claims covered by the collective actions.
Source: FINRA Regulatory Notice 12-28
This alert applies to the Series 79, Series 62, Series 24, Series 82, Series 7, Series 26, and Series 6.