FINRA RULE 12602 CODIFIES THE RIGHT OF NON-PARTY WITNESSES TO HAVE AN ATTORNEY PRESENT

FINRA RULE 12602 CODIFIES THE RIGHT OF NON-PARTY
WITNESSES TO HAVE AN ATTORNEY PRESENT

It has been practiced in the past that FINRA arbitrators would permit a non-party witness to have an attorney present at a hearing while the witness testifies. The attorney is present to protect the rights of the non-party witness. In an attempt to enhance the ideals of fairness in arbitrations, FINRA is amending Code of Arbitration Procedure for Customer Disputes, Rule 12602 and Code of Arbitration Procedure for Industry Disputes, Rule 13602 to codify the right that a non-party witness may have an attorney attend a hearing while the witness testifies. The attorney, unless otherwise authorized by the panel, will serve only to assert recognized privileges on behalf of the witness.

The attorney must be in good standing and admitted to practice before the United States Supreme Court or the highest court of one of the fifty states, D.C. or any commonwealth, territory or possession of the U.S. These amendments took effect October 14, 2010.

Non-party registered representatives and broker dealers summoned to testify in FINRA arbitrations should always go with an attorney. FINRA panels or attorneys for parties may ask questions which potentially impact liability as to the non-party. FINRA panels also have the right to refer what they perceive as violations by the testifying non-member to FINRA, even if the testifying non-member is not a party to the arbitration.