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FINRA's (Financial Industry Regulatory Authority, Inc.) New 'New' Discovery Guide: E-Discovery, Affirmations and Product Cases


On Sept. 16, 2013, the SEC approved amendments to the Financial Industry Regulatory Authority, Inc. (FINRA) Dispute Resolution Discovery Guide (Discovery Guide), which will become effective on Dec. 2, 2013 for all customer cases filed on or after the effective date.  FINRA petitioned the Securities and Exchange Commission (SEC) on April 1, 2011 to allow it to update the Discovery Guide.  FINRA filed its final proposed rule change on Sept. 4, 2013.


The Discovery Guide is designed to supplement the discovery rules contained in the FINRA Code of Arbitration Procedure for Customer Disputes (Customer Code).  The Discovery Guide includes two Document Production Lists (Lists), which set forth the types of documents that are required to be produced in an arbitration.  One list is for customer parties and one is for firms and associated persons.  The Discovery Guide is not exhaustive, and there remains flexibility in the discovery process.  Arbitrators may order discovery not delineated by the Discovery Guide, and also may limit discovery in certain cases.  Additionally, the parties are free to reach mutual agreements with respect to discovery.


The amendments approved by the SEC provide additional guidance on e-discovery issues, clarify the provision relating to affirmations in the event of non-production, and discuss the unique qualities of product cases as opposed to customer cases.  Specific changes are summarized as follows:

a. E-Discovery

  • An arbitrator may now allow a party to produce a relevant document in an alternative format if the original format will be too costly or burdensome to produce.

  • The parties are encouraged to reach their own agreements to voluntarily exchange documents, including agreements as to the format of document production.

  • The term “documents” is defined to include both hard copy and electronic documents.

  • Electronic files must be produced in a “reasonably usable format.”  Generally, this means that the production should be made in the same format in which the documents are ordinarily maintained or converted to a format that does not raise the cost or burden of review for the requesting party.

  • In the event that there is a disagreement over the proper format of production, the arbitrator is to consider the totality of the circumstances when deciding what is “reasonably usable.”  The arbitrator may consider, among other things, whether the production is made in the same format that the documents are ordinarily maintained in, whether third-party documents are produced in the same format as originally produced by the third party, and the reasons for conversion if the documents were converted to an alternative format.

b. Affirmation

  • Prior to the amended Discovery Guide, FINRA only mandated that a party make an affirmation if that party did not have any responsive documents in its possession, custody, or control.  The amended Discovery Guide now provides for affirmations even in the instance of a partial production, where a party produces some, but not all, of the documents specified by the Lists.

  • The customer or the appropriate person in the firm with knowledge must:

    • Affirm in writing that a good faith search was conducted [previously this only had to be stated, not affirmed];

    • Describe the extent of the search made, including stating the sources searched [previously there was no requirement concerning sources]; and

    • State that the party does not have the requested document in its possession, custody, or control [this portion was updated to reflect the fact that affirmations are no longer simply required when a party has no responsive documents].

  • An arbitrator expressly may order affirmations for documents not called for by the Lists [previously this was limited only to “appropriate cases”].

c. Product Cases

  • The amended Discovery Guide adds a new section on “product cases,” i.e., where one or more of the asserted claims focuses upon a specific security or a specific type of security.

  • The new section of the Discovery Guide highlights special circumstances that may apply in product cases:

    • Documents requested/produced may be significantly more voluminous;

    • Multiple investors may seek the same documents, and the same documents may have been produced to numerous parties in other cases;

    • Documents likely will not be client specific;

    • The security or type of security may be more likely the subject of an regulatory investigation;

    • Because of regulatory and/or litigation issues relating to a specific product, documents may be more likely the subject of a mandatory hold; and

    • Documents are more likely to relate to due diligence done by individuals and/or entities who did not handle the claimant’s account and may not be a party to the arbitration proceeding.

  • The amended Discovery Guide clarifies that the Lists may not be fully equipped to cover documents requested in a product case, and reiterates that parties may seek other relevant documents in accordance with the Customer Code.

  • If there is a disagreement as to the nature of the case, the parties may ask the arbitrator to determine whether a case is a product case.  The parties will have to explain to the arbitrator why the case is or is not a product case.

  • The arbitrators remain available to resolve any disputes between the parties as to what additional documents may need to be produced in any specific product case.


The amended Discovery Guide fulfills FINRA’s commitment to address electronic discovery and products case issues announced as part of the creation of its Discovery Task Force in April 2011.  While the revisions and additions reflect what likely has been the experience of many parties, counsel, and arbitrators who have handled these cases since the 2008 global financial markets collapse, the amended Discovery Guide provides the plaintiffs’ bar a documented basis upon which it can – and will – make arguments for more expansive, and more expensive, discovery.  As a result, having counsel experienced with handling these issues will count more than ever.  Greenberg Traurig, LLP has that experience.

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume III, Number 324

About this Author

Michael Pastore, Greenberg Traurig Law Firm, Boston, Corporate Law, Finance and Litigation Law Attorney

Michael E. Pastore focuses his practice on financial services litigation, regulatory matters and consumer-related defense. Michael has represented banking clients and large financial institutions against alleged violations of various State and Federal Laws, including Mass General Laws Ch. 93A. Michael has also assisted companies in conducting internal investigations involving potential employee misconduct, as well as involving inquiries by the Securities and Exchange Commission, U.S. Department of Justice, FINRA, and various States’ Attorneys General.