Posts Tagged ‘securities industry’

I’m no fan of binding arbitration in the securities industry or elsewhere. It’s unfair to consumers and subverts the judicial process, which is a foundation of the constitution.

Unfortunately, it is a reality, though the situation has been improving somewhat over the past several years. Another sign of movement within the status quo to at least provide more of an appearance of fairness may be in the works.

Investment News reported yesterday that FINRA may decide to tighten standards around who can serve as a “public” arbitrator in a securities case. This is a move in the right direction, because a public arbitrator is supposed to be someone who is independent without an agenda or bias towards either party in a securities case.

Currently, former securities industry attorneys, brokers and others who have been affiliated with the industry can serve as arbitrators, it illustrates just how broken the system is. Pending a favorable outcome on the FINRA vote tomorrow, this system will get a bit more fair.

I’m hopefully, perhaps naively so, that the SEC may take steps to strike down or severely restrict the use of binding arbitration in securities disputes and allow Americans to access the justice system to pursue claims against the brokerage industry. That’s ultimately the only just forum to hear disputes between some of the world’s largest financial services corporations and others and consumers.

It could actually serve to level the playing field, and give consumers a chance to be heard and receive some justice. Stay tuned…