Amendments Relating to the Applicability of the Document Production Lists to Simplified Customer Arbitrations Administered Under Rule 12800 — FINRA — US

Notice Type
X Rule Amendment
Suggested Routing
X Compliance
X Legal
X Operations
X Registered Representatives
X Senior Management
Key Topic
X Arbitration
X Codes of Arbitration Procedure
X Discovery
X Dispute Resolution
X Simplified Arbitration
Referenced Rules & Notices
X FINRA Rule 12000 Series
X FINRA Rule 13000 Series
Simplified Customer Arbitrations
Amendments Relating to the Applicability of the Document Production Lists to Simplified Customer Arbitrations Administered Under Rule 12800 Effective Date: March 3, 2025 Summary FINRA has amended its Code of Arbitration Procedure for Customer Disputes (Customer Code) to clarify and, in some instances, amend the applicability of the Document Production Lists to simplified customer arbitrations administered under Rule 12800. The amendments are effective for arbitration cases filed on or after March 3, 2025. The rule text is available in Attachment A. Questions concerning this Notice should be directed to:
X Victoria Crane, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8104 or victoria.crane@finra.org; or X Carissa Laughlin, Principal Counsel, OGC, at (212) 858-4115 or carissa.laughlin@finra.org. Background & Discussion FINRA Dispute Resolution Services (DRS) provides a Discovery Guide to supplement the discovery rules contained in the Customer Code and help guide the parties and arbitrators through the discovery process in customer arbitrations.1 The Document Production Lists, which are included in the Discovery Guide and described in Rule 12506, outline presumptively discoverable documents that the parties should exchange, without arbitrator or DRS staff intervention. 1 Regulatory Notice 24-16 December 17, 2024

The amendments affect the applicability of the Document Production Lists in simplified customer arbitrations.2 There are three types of simplified customer arbitrations. If the customer does not request a hearing, the arbitrator will render an award based on the pleadings and other materials the parties submit (paper cases).3 If the customer requests a hearing, the customer must select between one of two hearing options.4 If the customer requests an Option One hearing under Rule 12800(c)(3)(A), the regular provisions of the Customer Code relating to prehearings and hearings, including all fee provisions, apply (regular hearing). Alternatively, the customer may request an Option Two special proceeding, an abbreviated hearing, under Rule 12800(c)(3)(B) (special proceeding). Prior to the amendments, the Document Production Lists applied in simplified customer arbitrations in which the customer requested a regular hearing, but did not apply in paper cases and special proceedings. Accordingly, to obtain discovery in paper cases and special proceedings, the parties would have to request documents and other information from each other without the benefit of the Document Production Lists. As a result, no documents or information would be presumptively discoverable in paper cases and special proceedings, but they would be presumptively discoverable in simplified customer arbitrations in which the customer requested a regular hearing. The amendments allow customers to decide whether to use the Document Production Lists in paper cases and special proceedings.5 Specifically, the amendments provide that the Document Production Lists do not apply to arbitrations in which the customer requests no hearing, pursuant to paragraph (c)(2) of Rule 12800 (i.e., paper cases), or to arbitrations in which the customer requests an Option Two special proceeding, pursuant to paragraph (c)(3)(B) of Rule 12800 (i.e., special proceedings), unless the customer requests that the Document Production Lists apply to all parties when initiating an arbitration pursuant to Rule 12302 or, if the customer is a respondent, no later than the answer due date pursuant to Rule 12303, regardless of the parties’ agreement to extend any answer due date.6 If the customer does not timely request that the Document Production Lists apply to all parties, the amendments retain the current provision in the rule that the arbitrator has the discretion to use relevant portions of the Document Production Lists in a manner consistent with the expedited nature of simplified proceedings.7 In addition, the amendments continue to permit the parties to request documents and information from each other.8 2 Regulatory Notice 24-16 December 17, 2024

To increase parties’ awareness and understanding of the discovery process in simplified customer arbitrations in which the customer requests a regular hearing, the amendments also add language to Rule 12800 to explicitly provide that the Document Production Lists apply to arbitrations in which the customer requests an Option One hearing (i.e., a regular hearing).9 Effective Date The amendments are effective for arbitration cases filed on or after March 3, 2025. Endnotes 1 See the Discovery Guide. The Discovery Guide and Document Production Lists do not apply to arbitrations administered under the Code of Arbitration Procedure for Industry Disputes. 2 Simplified customer arbitrations are arbitrations in which the dispute between a customer and member firm or associated person involves $50,000 or less, exclusive of interest and expenses. See Rule 12800(a). 3 See Rule 12800(c)(2). 4 See Rule 12800(c)(3). 5 See Securities Exchange Act Release No. 101449 (Oct. 28, 2024), 89 FR 87435 (Nov. 1, 2024) (Order Approving File No. SR-FINRA-2024-008). 6 See Rule 12800(g)(1)(B). 7 Id. 8 See Rule 12800(g)(2). Nothing in the Discovery Guide precludes the parties from voluntarily agreeing to an exchange of documents in a manner different from that set forth in the Discovery Guide. 9 See Rule 12800(g)(1)(A). See also FINRA DRS Party’s Reference Guide (providing that the Document Production Lists apply to simplified arbitrations in which a customer requests a regular hearing). Regulatory Notice 3 December 17, 2024 24-16 ©2024. FINRA. All rights reserved. Regulatory Notices attempt to present information to readers in a format that is easily understandable. However, please be aware that, in case of any misunderstanding, the rule language prevails.

ATTACHMENT A
New language is underlined; deletions are in brackets.

12000. CODE OF ARBITRATION PROCEDURE FOR CUSTOMER DISPUTES

12800. Simplified Arbitration
(a) through (f) No Change.
(g) Discovery and Additional Evidence
(1) Applicability of Document Production Lists (A) Option One Hearing. The Document Production Lists, described in Rule 12506, [do not] apply to arbitrations [subject to this rule]in which the customer requests an Option One hearing under paragraph (c)(3)(A) of this Rule. (B) No Hearing or Option Two Special Proceeding. The Document Production Lists, described in Rule 12506, do not apply to arbitrations in which the customer requests no hearing, pursuant to paragraph (c)(2) of this Rule, or to arbitrations in which the customer requests an Option Two special proceeding, pursuant to paragraph (c)(3)(B) of this Rule, unless the customer requests that the Document Production Lists apply to all parties when initiating an arbitration pursuant to Rule 12302 or, if the customer is a respondent, no later than the answer due date pursuant to Rule 12303, regardless of the parties’ agreement to extend any answer due date. [However,]Even if the customer does not

timely request that the Document Production Lists apply to all parties, the arbitrator [may, in his or her]has the discretion[, choose] to use relevant portions of the Document Production Lists in a manner consistent with the expedited nature of simplified proceedings. (2) Making Other Discovery Requests The parties may also request documents and other information from each other. All requests for the production of documents and other information must be served on all other parties, and filed with the Director, within 30 days from the date that the last answer is due. Any response or objection to a discovery request must be served on all other parties and filed with the Director within 10 days of the receipt of the requests. The parties receiving the request must produce the requested documents or information to all other parties by serving the requested documents or information by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Parties must not file the documents with the Director. The arbitrator will resolve any discovery disputes. (h) through (i) No Change.