FINRA has arbitration process for auction-rate debt

WASHINGTON (Reuters) - The U.S. brokerage watchdog has established a special process for resolving claims involving auction-rate securities in its arbitration forum.

The Financial Industry Regulatory Authority (FINRA) said on Thursday that qualifying investors will have the option of having their claims heard by a three-person panel of arbitrators.

The two public arbitrators and one nonpublic arbitrator would not be affiliated with a firm that recently sold auction rate securities, FINRA said.

More than 170 cases involving auction-rate securities have been filed with FINRA.

FINRA's announcement comes as Citigroup Inc agreed to buy back more than $7 billion of illiquid auction-rate securities and pay a $100 million civil fine to settle charges it fraudulently misled investors about the debt's risk.

(Reporting by Rachelle Younglai; Editing by Andre Grenon)