FINRA Rule 12510: Depositions

FINRA Rule 12510: Depositions
For the most part, investor complaints against brokerage firms and financial advisors are resolved either through informal negotiation, mediation or FINRA arbitration. Should their claim need to go before a FINRA arbitration panel, an investor must be ready to present a strong legal case.

Indeed, to prevail in a FINRA arbitration claim, an investor will need to be able to prove that their brokerage firm or financial advisor should be held legally liable for their damages. As with any other type of legal case, a successful claim must be built on a strong foundation of supporting evidence.

The FINRA discovery process offers investors tools to obtain some key pieces of evidence. Though, FINRA discovery is largely limited to documents and records. In fact, during FINRA discovery, the use depositions is strongly discouraged. However, FINRA Rule 12510 does provide for some limited exceptions to this general rule. Here, our FINRA arbitration lawyers explain when depositions are allowed.


When are Depositions Allowed in FINRA Arbitration? The Four Key Exceptions


  1. Preservation of Testimony

First and foremost, a FINRA arbitration panel may allow a deposition if the moving party can prove that such a deposition is required to preserve the testimony of an ill or dying witness. In this situation, the party seeking the deposition must be able to prove, through a preponderance of evidence, that the circumstances necessitate special action to ensure that relevant testimony can be taken because the witness may not be around to give testimony at the time of the hearing.


  1. Special Witness Accommodation

FINRA arbitration panels are also granted the authority to allow for depositions to accommodate certain witnesses. In general, this exception is reserved for witnesses who would have to travel a long distance to get to the hearing, and who would not otherwise be required to participate in the hearing. Once again, good cause must be shown for a deposition to be granted using this type of exception.


  1. Expedite the Process

Some FINRA arbitration claims are extremely complex. For these unusually complicated cases, depositions may be allowed as a way to help expedite the legal process, thus keeping the hearing more focused and organized. In general, this exception for depositions will only be allowed in cases that have a large number of witnesses.


  1. Extraordinary Circumstances

Finally, FINRA arbitration panels also have the authority to allow depositions when extraordinary circumstances warrant doing so. This is essentially a catch-all exception that is reserved for unusual circumstances that do not quite fit into any of the aforementioned categories. It gives arbitrators the ability to do whatever is necessary to promote an efficient and fair resolution to a complaint.


Contact Our FINRA Arbitration Attorneys Today

At Sonn Law Group, our top-rated investment fraud lawyers have the skills and legal experience needed to handle claims in front of FINRA arbitration panels. We can hold your negligent financial advisor or brokerage firm legally liable for your losses. To get your free case evaluation, please call our team today or reach out to us directly online. We look forward to assisting you.