The Expert's Examiner

September 8, 2020

Although FINRA is bound by its rules to record hearings, the Authority does not video record virtual hearings conducted by Zoom. Only the audio track is recorded. 

Recall that we reported in SAA 2020-15 (Apr. 22) on Dominick & Dickerman LLC v. Wunderlich Securities, Inc., FINRA ID #17-01930 (New York, NY, Apr. 6, 2020), the first FINRA Award in a case including a hearing by videoconference due to the Coronavirus. The unanimous Award said: “Pursuant to an agreement between counsels, all the hearings, except March 12, were held at the offices of Claimants’ counsel in New York City. On the consent of counsel for both sides and the arbitrators, the March 12 hearing was held virtually via Zoom with counsel for Claimants, counsel for Respondents and the arbitrators all being at different locations due to concern with the Coronavirus crisis.”

We later reported in SAA 2020-17 (May 6) that Wunderlich was challenging the $11.4 million Award in the Southern District of New York, based in part on the Arbitrators being “inattentive” during the Zoom hearing. Our editorial comment in #17 was: “assuming as we must that the video hearing was recorded, one imagines that the recording will be offered as evidence that the panel was 'inattentive.' That visual evidence of course wouldn’t be available in a transcript or audio recording.” Turns out our assumption was incorrect. Speaking May 28 at a Securities Experts Roundtable Webinar, FINRA Dispute Resolution Services (“DRS”) chief Rick Berry said that DRS is recording only the audio part of hearings conducted via Zoom. He added that only audio recording was required by the Code of Arbitration Procedure.

(ed: Query whether DRS would record the video part as well if all parties and the arbitrators agreed? Rule 12606 would seem to allow this, as it provides that FINRA: “will make a tape, digital, or other recording of every hearing.” We assume the forum would accede to party and panel wishes, but as noted above our assumptions can be wrong.)