FINRA Extends Public Arbitrator Pilot Program

Representing Investors Nationwide

The Financial Industry Regulatory Authority (FINRA) has agreed to extend a pilot program that gives claimants the option of an arbitration panel without an industry-affiliated arbitrator.

In FINRA administered securities arbitration, the number of arbitrators chosen is based on the amount of damages claimed. Most arbitration cases are heard by a three-arbitrator panel. Of those three members, one is typically affiliated with the securities industry, while two others, including the Chairman are classified as public arbitrators.

Investors and attorney’s representing them have felt the industry arbitrator may bring a built-in bias in favor of their industry to the proceeding. By giving investors the option of a panel comprised of three public arbitrators…at least the potential for or perception of industry bias is somewhat eliminated.

Finra didn’t formally announce the extension but it was mentioned on the SRO’s website www.finra.org.

Fourteen firms are participating in the program and have agreed, collectively, to have over 400 cases heard in 2010 and again in 2011. The participating firms include UBS Financial Services Inc., Citigroup Global Markets, Inc. and and Wells Fargo Advisors.

If you believe you have lost money due to broker negligence or fraud and would like to discuss your options for recovery, including FINRA arbitration, please contact our offices.