• FINRA Proposes Arbitration and Exam Fee Increases, Declares Rebate
  • January 10, 2015 | Author: Vincent J. "V. J." Graffeo
  • Law Firm: Burr & Forman LLP - Birmingham Office
  • Following the final 2014 meeting of the Board of Governors last week, FINRA announced its proposal to increase fees associated with cancelling or postponing an arbitration hearing. In a December 4, 2014 email to firms, FINRA reported that the Board proposed to amend Rules 12601 and 13601 of the Code of Arbitration Procedure to extend the time required to give notice of an arbitration cancellation and increase cancellation fees. Under the proposed rule, if a party requests and receives a postponement or cancellation less than 10 days from a scheduling hearing, it would have to pay an additional $600 fee per arbitrator. This would be a significant increase of both the notice period and fee amount from the current rules, which provide for only a three day notice period and a fee of an additional $100 per arbitrator for cancellations and postponements. In support of this proposal, the Board noted the purpose of this amendment would not only be to encourage parties to provide more advance notice of postponements and settlements, but to also provide lost time and opportunity costs to arbitrators.

    A second proposed fee increase rule change authorized by the Board is to amend Schedule A to the FINRA By-Laws to increase qualification examination fees between $5 and $15 for each FINRA and client-sponsored exam starting in April 2015. This would be the first increase since 2012. This proposal was the result of FINRA’s annual review of the examination fee structure, which determined increases were necessary to maintain the costs of development, administering and delivering each examination program.

    Notwithstanding these proposed fee increases for 2015, FINRA reported a strong financial performance for 2014, projecting excess revenue to exceed budget by more than $30 million. FINRA attributed this excess due in part to stronger equity trading volume, resulting in higher trading activity fees, along with higher corporate financing, filing volume and transparency services fees. As in 2013, the Board approved a special discretionary rebate of $20 million to be allocated to all firms due to the excess. All active firms in good standing will receive a $1,200 rebate to offset the minimum gross income assessment fee by year end, as well as a prorated share of each firm’s 2014 regulatory fees paid to FINRA, including the gross income assessment, branch office assessment, personnel assessment and trading activity fee.

    FINRA’s December, 4, 2014 email to firms is here - http://www.finra.org/Industry/Regulation/Guidance/CommunicationstoFirms/P601956.