Understanding FINRA Rule 12510 on Depositions
If you’re involved in a FINRA arbitration case, you may be wondering whether depositions—common in court litigation—are part of the process. The answer is: rarely. Unlike traditional courtroom proceedings, FINRA arbitration is designed to be faster and less expensive, and depositions are generally not allowed unless there are exceptional circumstances. FINRA Rule 12510 outlines the limited situations in which it may be permitted.
FINRA Rule 12510: Depositions
Depositions are strongly discouraged in arbitration. Upon motion of a party, the panel may permit depositions, but only under very limited circumstances, including:
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To preserve the testimony of ill or dying witnesses;
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To accommodate essential witnesses who are unable or unwilling to travel long distances for a hearing and may not otherwise be required to participate in the hearing;
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To expedite large or complex cases; and
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If the panel determines that extraordinary circumstances exist.
So depositions can be permitted—but only in very limited situations. The FINRA training materials for arbitrators elaborate on these limitations and explain why depositions are discouraged in arbitration.
FINRA’s Guidance for Arbitrators
All of this comes from page 32 of the FINRA arbitrator training materials, which serve as guidance on the arbitration process and how arbitrators should approach motions like those requesting depositions.
“The goal of arbitration is the speedy and inexpensive resolution of a controversy; therefore, depositions are not generally part of the arbitration process.”
Generally, witnesses may only be compelled to attend a deposition or hearing if it is held in a location that is convenient, such as the county where they live, work, or conduct business.
Before granting a deposition request, arbitrators are instructed to consider:
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What information is being sought and whether it’s important;
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Whether the witness could testify at the hearing instead;
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Whether a less burdensome alternative exists (e.g., stipulation, written questions, or telephonic testimony).
FAQs about Depositions in FINRA Arbitration
1. Can I request a deposition in my FINRA arbitration case?
Yes, but depositions are only permitted in rare circumstances. You must file a motion and demonstrate to the arbitration panel that the situation meets one of the limited exceptions under FINRA Rule 12510.
2. Why are depositions discouraged in FINRA arbitration?
FINRA arbitration is intended to be faster and less costly than court litigation. Depositions are time-consuming and expensive, often adding unnecessary complexity and cost to a case.
3. What alternatives are available instead of depositions?
If testimony is needed from someone who cannot attend the hearing, arbitrators may consider other options such as telephonic testimony, written interrogatories, or stipulations agreed to by both parties.
About The White Law Group
This information is publicly available and provided by The White Law Group.
The White Law Group is a national securities fraud, arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. Since its founding in 2010, the firm has handled over 800 FINRA arbitration cases, helping investors nationwide.
