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TIN:
SCHEDULE O
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
(Form 990 or 990-EZ)
Department of the Treasury
Internal Revenue Service
Supplemental Information to Form 990 or 990-EZ
Complete to provide information for responses to specific questions on
Form 990 or to provide any additional information.
Attach to Form 990 or 990-EZ.
Information about Schedule O (Form 990 or 990-EZ) and its instructions is atwww.irs.gov/form990.
OMB No. 1545-0047
2013
Open to Public
Inspection
Inspection
Name of the organization
FINRA DISPUTE RESOLUTION INC
Employer identification number
52-2187577
52-2187577
| Return Reference | Explanation |
|---|---|
| VOLUNTARY DISCLOSURE OF FINANCIAL INFORMATION | THE FINANCIAL INFORMATION INCLUDED IN THE FORM 990 IS PRESENTED ON A STAND-ALONE BASIS WITH ALL SIGNIFICANT INTERCOMPANY RECEIVABLE AND PAYABLE AMOUNTS ELIMINATED AND DOES NOT REPRESENT THE CONSOLIDATED RESULTS FOR FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA) AND ITS SUBSIDIARIES. THE FINANCIAL INFORMATION PRESENTED REFLECTS ESTIMATES OF OVERHEAD ALLOCATIONS. THE 2013 FORM 990 SHOULD BE READ IN CONNECTION WITH THE 2013 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. SEE ALSO SEPARATE 2013 FORM 990'S FOR RELATED ENTITIES, INCLUDING FINRA, FINRA REGULATION, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. |
| FORM 990, PART III, LINE 4 | FINRA OPERATES THE LARGEST SECURITIES DISPUTE RESOLUTION FORUM FOR INVESTORS, BROKERAGE FIRMS, AND ASSOCIATED PERSONS IN THE UNITED STATES. IT HANDLES OVER 99 PERCENT OF SECURITIES-RELATED ARBITRATIONS AND A SIGNIFICANT PORTION OF THE SECURITIES-RELATED MEDIATIONS IN THE UNITED STATES. ON AVERAGE, FINRA DISPUTE RESOLUTION, INC. ADMINISTERS BETWEEN 5,000 AND 7,000 ARBITRATIONS AND BETWEEN 500 AND 800 MEDIATIONS ANNUALLY THROUGH ITS NETWORK OF FOUR OFFICES IN NEW YORK, BOCA RATON, CHICAGO AND LOS ANGELES. IT CONDUCTS ARBITRATIONS AND MEDIATIONS IN 71 HEARING LOCATIONS, INCLUDING AT LEAST ONE IN EACH OF THE 50 UNITED STATES, PUERTO RICO AND LONDON, ENGLAND. 4A) ARBITRATION / MEDIATION PROGRAM: FINRA OPERATES THE LARGEST DISPUTE RESOLUTION FORUM IN THE UNITED STATES. THE FORUM ALLOWS FOR THE RESOLUTION OF DISPUTES BETWEEN INVESTORS AND SECURITIES FIRMS AND THEIR EMPLOYEES. THROUGH ITS SUBSIDIARY FINRA DISPUTE RESOLUTION, INC., FINRA OFFERS BOTH ARBITRATION AND MEDIATION SERVICES ADMINISTERED THROUGH A NETWORK OF FOUR REGIONAL OFFICES ACROSS THE UNITED STATES WITH HEADQUARTER DEPARTMENTS IN NEW YORK CITY, NY AND WASHINGTON, D.C. FINRA DISPUTE RESOLUTION, INC. FACILITATES THE EFFICIENT RESOLUTION OF MONETARY, BUSINESS AND EMPLOYMENT DISPUTES WITHIN THE INDUSTRY, AS WELL AS A VARIETY OF INVESTMENT DISPUTES INVOLVING STOCKS, BONDS, OPTIONS, MUTUAL FUNDS AND OTHER TYPES OF SECURITIES FOR INVESTORS. 4B) NEUTRAL MANAGEMENT: IN SUPPORT OF THE ARBITRATION AND MEDIATION FORUM OPERATED BY FINRA DISPUTE RESOLUTION, INC., FINRA RECRUITS, TRAINS AND MANAGES LARGE ROSTERS OF NEUTRAL ARBITRATORS AND MEDIATORS. IN 2013, FINRA DISPUTE RESOLUTION, INC. MANAGED MORE THAN 6,400 ARBITRATORS AND ABOUT 250 MEDIATORS. FINRA CAREFULLY SELECTS EACH ARBITRATOR FROM A DIVERSE CROSS-SECTION OF PROFESSIONALS. THESE FINRA NEUTRALS ARE INDEPENDENT CONTRACTORS, NOT FINRA EMPLOYEES, AND ARE AVAILABLE TO ARBITRATE AND MEDIATE CASES IN 71 LOCATIONS AROUND THE COUNTRY, IN PUERTO RICO AND LONDON, ENGLAND. |
| FORM 990, PART VI, LINE 2 | DURING TAX YEAR 2013, OR A PORTION THEREOF, THE FOLLOWING FINRA DISPUTE RESOLUTION, INC. DIRECTORS ALSO SERVED TOGETHER AS MEMBERS OF THE BOARD OF NYSE REGULATION. DR. SHIRLEY ANN JACKSON KURT P. STOCKER |
| FORM 990, PART VI, LINE 6 | FINRA IS THE SOLE NOT-FOR-PROFIT STOCKHOLDER OF FINRA DISPUTE RESOLUTION, INC. |
| FORM 990, PART VI, LINE 7A | FINRA, THE SOLE NOT-FOR-PROFIT STOCKHOLDER, ELECTS ALL MEMBERS OF THE GOVERNING BODY. |
| FORM 990, PART VI, LINE 7B | FINRA, THE SOLE NOT FOR-PROFIT STOCKHOLDER, RETAINS THE FOLLOWING AUTHORITY AND FUNCTIONS: 1) TO EXERCISE OVERALL RESPONSIBILITY FOR ENSURING THAT THE ASSOCIATION'S STATUTORY AND SELF-REGULATORY OBLIGATIONS AND FUNCTIONS ARE FULFILLED. 2) TO DELEGATE AUTHORITY TO THE SUBSIDIARIES TO TAKE ACTIONS ON BEHALF OF THE ASSOCIATION. 3) TO ELECT THE SUBSIDIARY BOARDS OF DIRECTORS. 4) TO REVIEW THE RULEMAKING AND DISCIPLINARY DECISIONS OF THE SUBSIDIARIES. 5) TO COORDINATE ACTIONS OF THE SUBSIDIARY BOARDS AS NECESSARY. 6) TO RESOLVE ANY DISPUTES AMONG THE SUBSIDIARIES. 7) TO ADMINISTER COMMON OVERHEAD AND TECHNOLOGY OF THE SUBSIDIARIES. 8) TO ADMINISTER THE OFFICE OF INTERNAL REVIEW AS PROVIDED IN THE ASSOCIATION'S BY-LAWS. 9) TO MANAGE EXTERNAL ASSOCIATION RELATIONS ON MAJOR POLICY ISSUES. 10) TO DIRECT THE SUBSIDIARIES TO TAKE ACTION NECESSARY TO EFFECTUATE THE PURPOSES AND FUNCTIONS OF THE ASSOCIATION. 11) TO TAKE ACTION AB INITIO IN AN AREA OF RESPONSIBILITY DELEGATED TO SUBSIDIARIES. |
| FORM 990, PART VI, LINE 11 | THE FORM 990 WAS REVIEWED BY SENIOR MANAGEMENT AT VARIOUS STEPS THROUGHOUT THE PREPARATION CYCLE. THE AUDIT AND MANAGEMENT COMPENSATION COMMITTEES REVIEWED AND APPROVED THE ORGANIZATION'S 2013 FORM 990 ON OCTOBER 3, 2014. THE BOARD WAS PROVIDED ACCESS TO THE FINAL FORM 990 FOR REVIEW (VIA A WEBSITE FOR BOARD MEMBERS ONLY) PRIOR TO FILING. |
| FORM 990, PART VI, LINE 12C | THE ORGANIZATION HAS WRITTEN CONFLICT OF INTEREST POLICIES FOR BOARD MEMBERS AND EMPLOYEES. THE WRITTEN CONFLICT OF INTEREST POLICY FOR BOARD MEMBERS REQUIRES INITIAL DISCLOSURE OF INTERESTS THAT COULD GIVE RISE TO CONFLICTS AS WELL AS ANNUAL DISCLOSURE BY THE SAME BOARD MEMBERS. ADDITIONALLY, THE WRITTEN POLICY CONTAINS AN ONGOING OBLIGATION OF BOARD MEMBERS TO DISCLOSE POTENTIAL CONFLICTS OF INTEREST AS THEY ARISE. THE EMPLOYEE CONFLICT OF INTEREST POLICY REQUIRES EMPLOYEES TO CERTIFY ANNUALLY AS TO THEIR COMPLIANCE WITH THE WRITTEN POLICY. THE WRITTEN POLICY CONTAINS AN ONGOING OBLIGATION FOR EMPLOYEES TO INFORM FINRA OF ALL BROKERAGE ACCOUNTS IN WHICH THEY HAVE AN INTEREST, AND TO ARRANGE FOR FINRA TO RECEIVE DUPLICATE ACCOUNT STATEMENTS. FINRA REVIEWS TRANSACTIONS IN EMPLOYEES' BROKERAGE ACCOUNTS TO ENSURE COMPLIANCE WITH FINRA'S INVESTMENT RESTRICTIONS. AMONG OTHER THINGS, THESE RESTRICTIONS PROHIBIT EMPLOYEES FROM HAVING AN INTEREST IN A BROKER-DEALER OR ENTITY THAT DERIVES 10% OR MORE OF ITS REVENUE, NET OF INTEREST EXPENSE, FROM BROKER-DEALER SUBSIDIARIES OR AFFILIATES. A LIST OF PROHIBITED COMPANIES IS POSTED ON FINRA'S CORPORATE INTRANET. FINRA'S DEPARTMENT HEADS HAVE ACCESS TO SEVERAL ONLINE REPORTS THAT HELP THEM AVOID ASSIGNING AN EMPLOYEE TO WORK ON A PROJECT THAT WOULD GIVE RISE TO A CONFLICT. FOR INSTANCE, A MANAGER CAN DETERMINE WHETHER AN EMPLOYEE'S STOCK HOLDINGS WOULD CONFLICT WITH A PROPOSED FINRA ASSIGNMENT (E.G., ASSIGNING AN EMPLOYEE TO NEGOTIATE A CONTRACT WITH A VENDOR IN WHICH THE EMPLOYEE HAS A SIGNIFICANT STOCK POSITION). EMPLOYEES ARE REGULARLY REMINDED OF THE RESOURCES THAT ARE AVAILABLE WHEN THEY ARE UNSURE WHAT TO DO. IN ADDITION TO TALKING TO DEPARTMENTAL MANAGEMENT, EMPLOYEES CAN DISCUSS CONFLICT-RELATED CONCERNS WITH FINRA'S OFFICE OF GENERAL COUNSEL OR ETHICS MANAGER. IF THEY ARE UNCOMFORTABLE DISCLOSING AN ISSUE AND DISCLOSING THEIR IDENTITY, THEY CAN USE FINRA'S 24-HOUR ETHICSPOINT HOTLINE TO POSE QUESTIONS OR REPORT CONCERNS. COMMUNICATIONS MADE THROUGH ETHICSPOINT ARE CONFIDENTIAL AND, IF THE EMPLOYEE WISHES, ANONYMOUS. FINRA'S WHISTLEBLOWER POLICY FORBIDS RETALIATION AGAINST EMPLOYEES WHO REPORT SUSPECTED MISCONDUCT IN GOOD FAITH, EVEN IF THE REPORT ULTIMATELY PROVES TO BE ERRONEOUS. |
| FORM 990, PART VI, LINES 15A AND 15B | THE MANAGEMENT COMPENSATION COMMITTEE OF THE FINRA BOARD OF GOVERNORS (THE "COMMITTEE") IS RESPONSIBLE FOR SETTING PAY FOR EXECUTIVES OF FINRA AND SUBSIDIARIES WHOSE TOTAL COMPENSATION, INCLUDING INCENTIVE COMPENSATION, MAY EXCEED $1 MILLION. THE COMMITTEE IS COMPRISED OF FOUR NON-EMPLOYEE, NON-SECURITIES INDUSTRY MEMBERS OF THE BOARD OF GOVERNORS. THE COMMITTEE MET ON JANUARY 20, 2013 AND FEBRUARY 12, 2013 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING THE CALENDAR YEAR 2012 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2013. AS A GENERAL POLICY, FINRA HAS DETERMINED ITS COMPETITIVE COMPENSATION POSITIONING SHOULD BE CONSIDERED AGAINST A BROAD SELECTION OF FINANCIAL SERVICES / CAPITAL MARKET COMPANIES, AS THIS SECTOR IS THE MOST LIKELY FROM WHICH WE RECRUIT TALENT AND TALENT IS RECRUITED FROM US. WE ALSO BENCHMARK AGAINST GENERAL INDUSTRY POSITIONS AND LAW DEPARTMENTS FOR JOBS THAT ARE UNIQUE TO THE FINANCIAL SERVICES INDUSTRY. THE COMMITTEE ENGAGED MERCER, INC. ("MERCER"), A THIRD-PARTY COMPENSATION CONSULTANT, TO PREPARE A COMPENSATION STUDY FOR REVIEW AT THESE MEETINGS. IN DETERMINING A BENCHMARKING STRATEGY FOR KEY EXECUTIVES, FINANCIAL SERVICES ORGANIZATIONS (BROKER-DEALERS, INVESTMENT BANKS, FEDERAL RESERVE BANKS, COMMERCIAL BANKS, INSURANCE COMPANIES, EXCHANGES AND REGULATORS) WERE DETERMINED TO BE THE MOST RELEVANT GROUPS FOR COMPARISON PURPOSES. THE COMMITTEE AND MERCER ENGAGED IN SUBSTANTIAL RESEARCH AND CONSIDERATION OF THE FUNCTIONS AND OPERATIONS OF SEVERAL POTENTIAL COMPARATORS AS WELL AS GENERAL COMPETITIVE CONDITIONS. IN DETERMINING SPECIFIC SALARY AND INCENTIVE COMPENSATION LEVELS FOR OFFICERS AND KEY EMPLOYEES, MANAGEMENT AND THE COMMITTEE CONSIDER: 1) OPERATIONAL RESULTS 2) STRATEGIC INITIATIVES 3) FINANCIAL HEALTH/RESULTS 4) INDIVIDUAL PERFORMANCE 5) COMPETITIVE COMPENSATION LEVELS AS PREPARED BY MERCER, INC., A THIRD-PARTY COMPENSATION CONSULTANT THE COMMITTEE'S MINUTES OF THE JANUARY 30, 2013 AND FEBRUARY 12, 2013 MEETINGS WERE REVIEWED AND APPROVED AS ACCURATE AND COMPLETE FOLLOWING THE COMMITTEE'S APPROVAL OF THE SENIOR EXECUTIVE COMPENSATION PACKAGES. THE FULL BOARD FURTHER APPROVED THE 2012 INCENTIVE COMPENSATION OF THE CEO AT ITS BOARD MEETING ON FEBRUARY 13, 2013. ALL COMPENSATION COMMITTEE MEMBERS VOTED FOR THE PROPOSED LEVEL OF EXECUTIVE COMPENSATION. |
| FORM 990, PART VI, LINE 19 | THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS AND THE FINRA CONSOLIDATED AUDITED FINANCIAL STATEMENTS AVAILABLE UPON REQUEST. |
| FORM 990, PART VII, COLUMN B | THE OFFICERS / KEY EMPLOYEES LISTED IN FORM 990, PART VII, DEVOTE AN AVERAGE TOTAL OF 60 HOURS PER WEEK TO THE FILING ORGANIZATION AND ANY OR ALL OF THE FOLLOWING RELATED ORGANIZATIONS: FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., FINRA REGULATION, INC. AND FINRA INVESTOR EDUCATION FOUNDATION. |
| FORM 990, PART XI, LINE 9 | OTHER CHANGES IN NET ASSETS OR FUND BALANCES PRIMARILY RELATE TO ANY OR ALL OF THE FOLLOWING; CHANGES IN NET INCOME/(LOSS), UNRECOGNIZED EMPLOYEE BENEFIT PLAN AMOUNTS AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS. FOR ADDITIONAL INFORMATION PLEASE SEE THE 2013 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE @ WWW.FINRA.ORG. |
| FORM 990 PART IX LINE 11G | DESCRIPTION:ARBITRATOR FEES TOTAL FEES:6360122 |
| FORM 990 PART IX LINE 11G | DESCRIPTION:MEDIATOR FEES TOTAL FEES:1572236 |
| FORM 990 PART IX LINE 11G | DESCRIPTION:OTHER TOTAL FEES:603222 |
For Paperwork Reduction Act Notice, see the Instructions for Form 990 or 990-EZ.
Cat. No. 51056K
Schedule O (Form 990 or 990-EZ) 2013
Additional Data
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