Investors Opt for Arbitration Panels Without Ties to Wall Street
In an article by SUSANNE CRAIG
in the NY Times she states that that 77 percent of eligible investors were opting for a new program that allowed them to have their claim against Wall Street heard by a three-person panel with no links to the financial industry.
The Financial Industry Regulatory Authority, the Wall Street-financed regulatory body that oversees arbitration has long been criticized for being stacked in favor of the big brokerage firms. Investors who feel they have been wronged by Wall Street have one main course of action: arbitration.
For years, arbitration panels had to have one member who came from Wall Street but in 2008 FINRA began a pilot program that allowed for investors to pick an all-public panel.
Arbitration awards are hard to overturn, and parties looking to have one reversed must show things like fraud or disregard of the law in the process. Arbitrator bias was "the most common ground" parties used to try to have awards overturned. As a result arbitrator training manuals for FINRA now list cases where awards have been overturned because of arbitrator bias and FINRA, said the authority had stepped up its efforts to remind arbitrators to disclose any potential conflicts.