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SEC Approves FINRA Rule Change for All Public Arbitration Panels

By Mark H. Astarita, Esq.

The FINRA practice of requiring an "industry" arbitrator on all of its arbitration panels has finally come to an end. The requirement once upon a time had some merit, back in the day when arbitrations were simple, handled in a few afternoons, and were primarily simple disputes. Over the decades that I have been representing parties in securities arbitrations, the landscape has changed dramatically. While the concept was to have someone on a panel who understood the workings of the securities industry, FINRA altered the definition of industry arbitrator to the extent that so many individuals were included that the entire concept was lost in rule changes. It was also an issue to have an "experienced" industry arbitrator on a panel. While the thought is that the industry arbitrator could help the other arbitrators, that is simply not the case, and the risk that the panel will make decisions based on information from the industry arbitrator that was not evidence in the case has become far too great...continue to full post

Full post as published by SECLaw.com on February 01, 2011 (boomark / email).