In November 2013, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 13-40 which highlights the recent approval by the Securities and Exchange Commission (SEC) of amendments to the Discovery Guide used in customer arbitration proceedings. These amendments, which became effective for all customer cases filed on or after December 2, 2013, significantly alter the existing discovery standards for securities claims. Professionals handling these claims will benefit by understanding three key components of the amendment's impact.

First, the amended guide provides guidance on resolving electronic discovery (e-discovery) disputes. Second, the amendments clarify the circumstances under which a party may request an affirmation when an opposing party does not produce documents. Third, the amendments explain how “product cases” are different from other customer cases and describe the type of documents that parties typically request in product cases.

For background, FINRA sponsors an arbitration forum whereby most disputes brought by retail public customers in the securities industry are adjudicated. The FINRA arbitration system does not expressly impose upon its arbitration panels the Rules of Civil Procedure from the federal courts or the relevant state courts. Rather, the arbitrators are typically given discretion to decide discovery related issues with limited guidance from FINRA. The one notable exception in this regard has been the various versions of the Discovery Guide which set forth, among other things, standardized lists of documents considered presumptively discoverable. These amendments to the Discovery Guide are the first significant changes to the guide since May 16, 2011.