In securities arbitration, a lot of attention goes to the statement of claim, the account documents, and the hearing itself. But one of the most important moments often arrives earlier: the process of selecting the arbitrator or arbitrators who will decide the case.
That process can feel technical at first. Parties receive lists. They review disclosure reports. They rank some names, strike others, and try to think several moves ahead. In general terms, this is not just paperwork. It is one of the places where case strategy and procedure meet in a very practical way.
For investors and industry participants in the FINRA forum, panel composition can shape how a case is managed, how evidence is handled, how credibility is evaluated, and how the final award is reached. FINRA explains that arbitration awards are binding and that, in a three-arbitrator case, a majority vote is enough for an award to issue, which makes each seat on the panel meaningful from the start (FINRA arbitration process; FINRA decision and award).
This post explains how arbitrator selection works, what “ranking” and “striking” actually mean, and why panel composition matters more than many people first assume. If you want broader background on the forum itself, this overview of securities arbitration and FINRA disputes helps place arbitrator selection in the larger process.
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Arbitrator selection is the process by which the parties help determine who will hear the evidence, make procedural calls, evaluate witnesses, and decide the outcome.
FINRA uses a list-based system. According to FINRA, the parties receive identical lists of possible arbitrators generated by a computer algorithm, along with an Arbitrator Disclosure Report for each candidate and access to prior awards through FINRA’s public database (How parties select arbitrators; Arbitration Awards Online).
That means arbitrator selection is not random in the everyday sense. The names are generated from FINRA rosters through a structured system, but the parties are then given a meaningful role in narrowing and ordering the candidates. FINRA has described this as a process designed to give both sides input into who serves on the panel (FINRA arbitration process).
In practical terms, parties are often evaluating questions like these:
Those questions are why panel selection often has an outsized effect on the direction of the case.
In customer cases with one arbitrator, FINRA Rule 12402 provides that the arbitrator is generally a public arbitrator selected from the public chairperson roster, and the list selection algorithm generates a list of 10 public chair-qualified arbitrators (Rule 12402).
For three-arbitrator customer cases, the current Customer Code provides separate lists generated through FINRA’s selection process, including chair-qualified public arbitrators and public arbitrators, with conflict screening built into the process (Customer Code, 12000 Series; FINRA arbitrator selection). In industry cases, panel composition can differ substantially. For example, Rule 13402 explains that some industry disputes are decided by all non-public panels, while others involve a majority-public structure depending on the parties and claims involved (Rule 13402).