2016 Mitigating Risk: Key Litigation Developments - Financial Services >> Limitations On Motions To Dismiss In FINRA Arbitration

There are advantages to financial institutions in resolving disputes with investors through arbitration under the auspices of the Financial Industry Regulatory Authority (FINRA) rather than in court. These include streamlined procedures, reduced discovery costs, faster decisions, and finality. There are, however, important procedural issues to consider when approaching FINRA arbitrations, one of which is the near-total absence of a defendant's ability to move for dismissal of claims before trial.

FINRA's arbitration rules state that motions to dismiss prior to trial are discouraged. Although this mindset exists at many arbitration bodies, FINRA has codified this policy and, indeed, has taken it a step further. The pertinent rule expressly limits motions to dismiss prior to trial to two narrow and rare circumstances: