Publication

FINRA recently released its dispute resolution statistics for January through June 2013. Of significant interest, the statistics show a slowdown in the number of filings, a lower percentage of cases where the customer was awarded damages, and less disparity between awards entered by all-public panels and panels with one industry arbitrator.

There were 20% fewer new case filings through June 2013 than there were for the same time period in 2012, which has been a consistent trend since 2009 when there was a considerably high number of filings in the wake of the unprecedented market correction.

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In June 2013, FINRA announced the SEC approved amendments to the definition of “public arbitrator” to further address concerns of the claimants’ bar that former industry arbitrators turned public arbitrators skew panels in favor of the industry. FINRA also proposed new rules on arbitrator selection to make it easier to select all-public panels and amendments to the discovery guide to address electronic evidence, “product cases,” and affirmations regarding documents not produced.

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On July 2, 2013, the Securities and Exchange Commission issued a press release announcing three new initiatives of its Division of Enforcement:

1. The Financial Reporting and Audit Task Force. This task force will identify securities law violations relating to the preparation of financial statements, issuer reporting and disclosure, and audit failures. It will focus on identifying and exploring areas susceptible to fraudulent financial reporting, including ongoing review of financial statement restatements and revisions, analysis of performance trends by industry, and use of technology-based tools such as the Accounting Quality Model.

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