Discovery in Securities Arbitrations
One of the main differences between Securities Arbitration and traditional litigation in Court is that discovery is limited to basic documentary evidence. The parties are encouraged to cooperate in the exchange of relevant documents in a timely fashion. Depositions, for example, while prevalent in traditional court proceedings, are not used regularly (FINRA 12510), and may only be authorized in extremely complex scenarios or in situations involving the severe illness or death of a party.
The FINRA Discovery Guide lays out a list of documents that are discoverable in a case between a party and a financial professional. The parties are required to voluntarily produce these documents no later than sixty (60) days after the Statement of the Answer was to be filed. If for some reason the documents cannot be produced within the time allotted, the non-complying party must fully explain why they are not available and when they will be made so or object, per FINRA 12508 to the request. Any paperwork submitted with blacked-out sections (“redactions”) must clearly state that the document has been “redacted”
Additional discovery requests may be made on the defendant forty-five (45) days after the Statement of Claim is served on the defendant. Since interrogatories are not permitted in the Arbitration process, these additional requests must not require long written responses or be unduly numerous whenever possible. The party served with the request for additional documentation has sixty (60) days in which to produce, explain why not available or object to the request itself.
In accordance with FINRA 12511, the Arbitration Panel is vested with the power to severely punish those parties who do not fully and expeditiously reply to discovery requests; assess monetary fines; and ultimately dismiss an entire case, a defense, or a claim by either party if the egregious nature of the delay warrants such action according to the panel.
While a subpoena is unnecessary for parties to the action, it can be served on third parties for the purposes of testimony or the production of relevant documents. If a party wishes to object to the subpoenaing of the third party they must do so within ten (10) days and at which point the Chairperson makes a ruling on admissibility.
Twenty (20) days before the beginning of the actual Evidentiary Hearing each party must disclose all witnesses and relevant documents not previously introduced. Any documentation not submitted at the time required may be banned from admission unless good cause is shown to explain its original omission.