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Permanent all-public FINRA arbitrator program could pay dividends for investors

By Sean Sweeney on June 20, 2011

Traditionally, FINRA Arbitration panels consist of three arbitrators, a public arbitrator, a public chairperson, and an industry arbitrator. As the name suggests, the industry arbitrator is someone who works in the brokerage industry, and up until recently all three person panels were forced to have one industry person on the panel.

In 2008 FINRA launched a Public Arbitrator Pilot Program that for the first time gave certain investors the option to select an all public panel and did not require them to have an industry person on their panel.The best part of the program is that if an investor (or his attorney) felt that a particular industry person had a reputation of being fair, the investor had the option of striking the rest of the industry panel members and ranking for possible inclusion in the panel the favorable industry person.

FINRA recently released some statistics regarding results from the Pilot program and the numbers, though still too early to draw concrete conclusions, seem positive.

There have been 41 awards issued in those arbitrations that took part in the Pilot Program through June 1, 2011. Of those 41 awards, 25 of them awarded damages to investors (61%). This compares favorably with the average for non-Pilot Program arbitrations in 2009 and 2010 which awarded damages to investors only 49% and 48% of the time respectively.

When you compare the overall numbers of positive results, either an award of damages to the investor or a settlement of claims, those filed under the PIlot Program showed a positive result for investors 89% of the time, as opposed to non-Pilot program arbitration in 2010 which showed a positive result for investors only 79% of the time.

On February 15, 2011, the SEC approved the FINRA proposal to give investors a permanent option of all-public arbitration panels. Hopefully we will continue to see the same positive early results and investors will indeed see dividends in the money returned to them as a result of securities fraud.

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Milwaukee Office

320 E Buffalo St
Ste 611
Milwaukee, WI 53202

Open Today 8:00am - 5:00pm

Open Saturday and Sunday for calls and emails.

More Info Directions (414) 755-5020