Summary Shows Investors Continue to Prevail in FINRA Arbitration Decisions

Investors were awarded damages (monetary damages or non-monetary relief) in over half (51 percent) of the arbitration cases decided by a FINRA panel in January and February, according to a summary recently released by FINRA. This seems to reflect a continual upward trend in more investor-friendly FINRA panels.

Since 2007, the percentage of FINRA panel decisions in which investors were awarded damages has steadily increased from 37 percent to 47 percent (in 2010). This year, if current numbers hold steady or increase, could be the first year in many in which investors prevail in more than half of the FINRA cases decided by an arbitration panel.

Last year saw an overall decrease in arbitration cases filed but an increase in the number of cases closed. According to FINRA's recent summary, this trend looks like it may continue through 2011. In January and February, there were 837 new cases filed (compared to 918 during the same time frame in 2010) and 957 cases closed (compared to 828 through February 2010). This shows a 9 percent reduction and a 16 percent increase respectively.

Breach of fiduciary duty continues to be the most common type of claim filed with FINRA, followed by negligence, misrepresentation, failure to supervise, breach of contract, and unsuitability claims. A large number of the claims filed so far in 2011 involve common stock securities and mutual funds.


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