An investor who bought structured notes in 2022 will generally reach FINRA’s six-year arbitration eligibility limit at some point in 2028. Under FINRA Rule 12206, no claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim. The rule decides whether an arbitration claim may be heard in the FINRA forum at all. It does not decide whether the claim has merit.
This article explains how Rule 12206 works, why it matters for structured note investment losses, how the six-year period may be counted, and how motions to dismiss on eligibility grounds proceed. Many investors and advisors already review their portfolios in the fourth quarter, and that review is a practical prompt to confirm purchase dates on 2022 structured note positions and to retain the related documents.
What Is FINRA Rule 12206, the Eligibility Rule for FINRA Arbitration?
FINRA Rule 12206 is the eligibility rule in the Code of Arbitration Procedure for Customer Disputes, the Rule 12000 series of FINRA rules that governs arbitrations between customers and FINRA member firms or their associated persons. It bars a claim from FINRA arbitration once six years have passed from the occurrence or event giving rise to the claim. The panel will resolve any questions regarding the eligibility of a claim under this rule. The full text appears on the FINRA Rule 12206 rulebook page.
Rule 12206 is an eligibility rule, not a statute of limitations. It controls access to one forum, and the rule does not extend applicable statutes of limitations. It should not be confused with FINRA Rule 1220, which sets out registration categories for associated persons and has no bearing on arbitration time limits.
How the Six-Year Clock Is Measured: The Occurrence or Event Giving Rise to the Claim
The rule measures time from an “occurrence or event,” not from a stated transaction date. In practice, brokerage firms often argue that the purchase date starts the clock. Respondents commonly take the position that the ‘occurrence or event giving rise to the claim’ is the investment purchase date. Claimants sometimes argue for a later event, such as a later recommendation or the point at which the problem with the investment came to light.
Which event controls is a fact-specific question for the arbitration panel. This article describes the rule and does not apply it to any particular dispute.
Rule 12206 and the Structured Note Statute of Limitations: How They Differ
|
Feature |
FINRA Rule 12206 (eligibility rule) |
State or federal statute of limitations or repose |
|---|---|---|
|
What it bars |
Submitting the claim to FINRA arbitration |
The legal claim itself, in any forum where it applies |
|
Trigger |
Six years from the occurrence or event giving rise to the claim |
Varies by statute, claim type, and jurisdiction |
|
Who decides |
The FINRA arbitration panel |
A court, or arbitrators applying the law |
|
Effect of dismissal |
The claim may still be pursued in court |
The claim may be extinguished |
The last row reflects the rule text: dismissal of a claim under this rule does not prohibit a party from pursuing the claim in court. Court deadlines run separately and may already have expired, so a dismissal under Rule 12206 does not guarantee that another forum is available.
Why Do 2022 Structured Note Purchases Reach the FINRA Arbitration Deadline in 2028?
The arithmetic is simple: if the purchase date is treated as the occurrence or event, a note bought in 2022 reaches six years in 2028. The exact date depends on the transaction and on which event the panel accepts, and not every 2022 purchase ages out on the same day.
Structured notes raise this issue more than most products. They are often held to maturity, many carry multi-year terms, and their payoff features can delay an investor’s review of whether a recommendation was suitable. As a result, structured note losses may not become apparent until a note matures or is called.
Regulators are now examining this period. FINRA’s review of higher-risk “worst-of” notes, announced on May 19, 2026, will examine firm conduct from January 2022 through the end of last year (that is, through December 31, 2025), according to WealthManagement.com.
FINRA has also stated that structured notes can expose investors to losses not correlated with overall market conditions. A regulatory review is not a finding that any particular sale was improper. For an example of how structured note disputes have reached FINRA arbitration, see the firm’s tracker of FINRA arbitration awards and settlements involving Stifel structured notes.
Worked Example Timeline for a 2022 Structured Note Purchase
The scenarios below are hypothetical illustrations. They are not predictions or advice about any actual investment.
|
Scenario |
Purchase date |
Maturity |
Six years from purchase |
|---|---|---|---|
|
Early 2022 purchase, short term |
February 10, 2022 |
August 2023 |
February 10, 2028 |
|
Late 2022 purchase, short term |
November 18, 2022 |
May 2024 |
November 18, 2028 |
|
2022 purchase, seven-year term |
June 1, 2022 |
June 2029 |
June 1, 2028 (before maturity) |
The third scenario matters most: a note that has not yet matured may still reach the six-year mark measured from purchase. Autocallable features can complicate the analysis further, as discussed in the firm’s overview of autocallable structured products and its explainer on equity-linked notes.
Structured Note Eligibility Rule: Why Maturity Does Not Reset the Clock
Rule 12206 contains no provision that restarts the six-year period at maturity. Three dates may be argued as the reference point: the purchase date, the maturity or call date, and the date a loss became apparent. Respondents generally argue for the earliest date. Whether a later event qualifies depends on the facts and may be disputed. An investor or advisor should not assume that a later maturity date extends eligibility, and should verify the rule text and consult counsel about any specific position.
How to Check Whether a Claim Is Eligible for FINRA Arbitration
An eligibility review starts with the documents. The following steps fit into a fourth-quarter portfolio review:
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Find the trade confirmation and record the trade date for each 2022 structured note purchase.
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Identify other relevant events, including later recommendations, rollovers, account statements that reflected losses, and maturity or call dates.
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Calculate six years from each date.
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Note the earliest resulting date as the conservative reference point.
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Review the account agreement and any predispute arbitration clause.
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Gather the offering documents, pricing supplements, statements, and correspondence for review.
Arbitration is the usual forum for these disputes, and the FINRA arbitration process is described in more detail on the firm’s site. Under FINRA rules, arbitration in the FINRA forum is required if there is a written agreement requiring FINRA arbitration or if it is requested by the customer. An investor who has already seen losses may find further background in the firm’s discussion of structured investment products. Background on claims against financial advisors appears on the firm’s advisor misconduct attorneys page.
Can Rule 12206 Be Raised in a Motion to Dismiss at a FINRA Arbitration?
Yes. Eligibility is one of the few grounds on which a respondent may seek early dismissal in a securities arbitration. FINRA’s arbitrator guidance confirms that if a party files a motion to dismiss on multiple grounds, including eligibility, the panel must decide eligibility first, pursuant to FINRA Rule 12206. If the panel dismisses on that basis, it must record the dismissal on eligibility grounds on the face of its order and any subsequent award.
When a Motion to Dismiss Is Permitted Under Rules 12504 and 13504
Rule 12504 of the Code of Arbitration Procedure for Customer Disputes and Rule 13504 of the Code of Arbitration Procedure for Industry Disputes govern motions to dismiss. Outside the eligibility context, a panel may grant a motion to dismiss a party or claim before the claimant’s case-in-chief concludes only where it determines that:
-
the non-moving party previously released the claim or claims in dispute by a signed settlement agreement and/or written release;
-
the moving party was not associated with the accounts, securities, or conduct at issue; or
-
the non-moving party previously brought a claim regarding the same dispute against the same party that was fully and finally adjudicated on the merits and memorialized in an order, judgment, award or decision.
To file a Rule 12504(a) motion to dismiss, parties must file the motion in writing, separately from the answer, and only after they file the answer. Parties must file any Rule 12504(a) motion at least 60 days in advance of a hearing. Parties will have 45 days to respond. A motion to dismiss under Rule 12206 follows different deadlines: it may be filed at any stage of the proceeding, but no later than 90 days before the scheduled hearing on the merits. The other parties have 30 days to respond. The details appear in the FINRA Motion to Dismiss FAQ.
Fees and Sanctions for a Motion to Dismiss in Bad Faith or Without Merit
Unsuccessful motions can be costly for the party that files them. If the panel denies a Rule 12504(a) motion, the panel must assess forum fees against the party who filed the motion. If the panel deems a Rule 12504(a) motion frivolous, it must also award reasonable costs and attorneys’ fees to the party who opposed the motion. The rules also allow sanctions under Rule 12212 where a motion is filed in bad faith.
What Happens If a Claim Is Filed in Court First, or Eligibility Is Disputed?
Rule 12206 covers filings in both directions between court and arbitration. Under subsection (d), if a party submits a claim to a court of competent jurisdiction, the six-year time limitation will not run while the court retains jurisdiction of the claim matter. In the other direction, when a claimant files a statement of claim in arbitration, any time limits for the filing of the claim in court will be tolled while FINRA retains jurisdiction of the claim.
If a panel finds a claim ineligible, the claim cannot proceed in the FINRA forum. Whether it can proceed elsewhere depends on the applicable statutes of limitation and repose, which is a question for counsel. Separately, FINRA published Regulatory Notice 26-06 on March 2, 2026, requesting public comment on modernizing FINRA arbitration rules, including forum selection, punitive damages, motions to dismiss, and arbitrator qualifications and training. In that notice, FINRA requests comment and does not adopt a rule change, so current Rule 12206 still governs. The NASAA comment letter describes one regulator’s response.
Can a Firm Shorten the Deadline Under the Code of Arbitration Procedure?
FINRA rules limit what customer agreements may say about time limits. In Regulatory Notice 21-16, issued April 21, 2021, FINRA reminded firms of the Rule 2268 requirements for predispute arbitration agreements. FINRA stated that customer agreements may not be used to shorten or extend statutes of limitations or require that a time-limit question be judicially determined rather than submitted to the arbitration panel under the Customer Code.
For structured note accounts, that makes the account agreement part of any eligibility review. Arbitration agreements also contain required disclosures, including that the rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.
Request a Structured Note Case Review with Bakhtiari & Harrison
Bakhtiari & Harrison is a securities arbitration and litigation firm based in Studio City, California, that represents clients nationwide. Ryan Bakhtiari served as Chairman of the FINRA National Arbitration and Mediation Committee from 2013 to 2017, the body that writes the rules governing FINRA arbitration.
For investors who hold or held structured notes bought in 2022, a case review involves examining trade confirmations, offering documents, account agreements and statements, and identifying the dates that may matter under Rule 12206 as 2028 approaches. The firm conducts reviews in person at the Studio City office or remotely by phone or video. More information is available on the firm’s FINRA attorneys page and its page on structured notes investor claims.
To request a confidential case review, call (800) 382-7969 or email rb@bhseclaw.com. Have the purchase confirmations for any 2022 structured note positions available. Investor cases are handled on a contingency fee basis: no recovery, no fee. That arrangement does not extend to financial professional matters. Questions about costs are addressed in the engagement agreement.
Attorney Advertising. This article provides general information only and is not legal advice. Reading it or contacting Bakhtiari & Harrison does not create an attorney-client relationship. Eligibility under FINRA Rule 12206 depends on the specific facts of each matter. Prior results do not guarantee a similar outcome.
