Meyer Wilson

Recovering Losses Caused By Investment Misconduct

FINRA Extends Public Arbitrator Pilot Program for Another Year

The Financial Industry Regulatory Authority (FINRA) is extending its Public Arbitrator Pilot Program for an additional year. The program gives the investor the option of electing to have a panel consisting of three public arbitrators hear their arbitration case, eliminating the “industry” arbitrator.

The program, which was launched In October 2008, was set to end after two years. However, the brokerage firms participating in the program have agreed to a one year extension.

Most arbitration cases are heard by a three-person panel, consisting of one non-public arbitrator and two public arbitrators. The non-public arbitrator is referred to as the “industry” arbitrator because he or she has worked in the securities industry. The Public Arbitrator Pilot Program allows an aggrieved investor to select a panel consisting of three public arbitrators, doing away with the non-public (or “industry”) arbitrator.

The use of an “industry” arbitrator has been criticized over the years because of the perception of bias or potential conflict of interest by the industry arbitrator in favor of Wall Street and its brokers.

Richard Ketchum, Chairman and Chief Executive of FINRA, recently suggested that FINRA may be moving toward allowing investors to choose to have an all public panel hear their disputes. The extension of the program will provide FINRA with more information in evaluating the possibility of making a permanent rule change.

The fourteen brokerage firms participating in the Public Arbitrator Pilot Program are:

• Ameriprise Financial Services
• Charles Schwab
• Chase Investment Services
• Citigroup Global Markets
• Edward Jones
• Fidelity Brokerage Services
• LPL Financial
• Merrill Lynch
• Morgan Stanley Smith Barney
• Oppenheimer
• Raymond James
• TD Ameritrade
• UBS Financial Services
• Wells Fargo Advisors

Categories: General

Choose a Firm with Accolades:

  • Super Lawyers
  • Million Dollar Advocates Forum
  • Preeminent AV Peer Review Rated
  • Best Lawyers Lawyer of the Year
  • Best Lawyers Best Law Firm
  • The Best Lawyers in America
  • Avvo 10/10 Rating