Brian Smiley comments in Wall Street Journal on PIABA’s petition to the SEC.
Attorneys who represent investors have asked the Securities and Exchange Commission to drop a requirement that a securities-industry representative sit on arbitration panels.
Investors who open a brokerage account generally sign away their rights to sue the broker or the firm for bad advice. They have to settle disputes through arbitration run by the Financial Industry Regulatory Authority, which is funded by the industry.
Cases where the amounts in dispute are at least $100,000 are heard before a three-person panel, one of whom must be an industry arbitrator. The other two are independent arbitrators. The proposed rule changes — put together by the Public Investors Arbitration Bar Association — resemble a pilot program FINRA started last year that will let some investors choose a panel of three independent arbitrators.
An official for the Securities Industry and Financial Markets Association says PIABA’s petition is premature without waiting for the pilot program’s results. FINRA and SEC representatives declined to comment. Brian Smiley, the lawyer group’s president, says, “The perception of people who go through the arbitration process is that they don’t get a fair shake.”
By Jane J. Kim