SEC Approves FINRA Proposal to Further Revise Definition of Public and Non-Public Arbitrator

Indisputably

The SEC approved FINRA’s proposal to ” refine and reorganize the definitions of ‘non-public’ arbitrator and ‘public’ arbitrator.” Customers who file an arbitration claim against a broker dealer or associated person now has the right to an all-public arbitration panel, so the definitions of who fits the two classifications are high stakes. This proposal is misguided, in my view, as it (among other changes) removes from the “public arbitrator” definition those attorneys who regularly represent customers in securities disputes. The original purpose of the two categories was to have a category for those arbitrators who had some connection to or affiliation with the securities industry (non-public). By switching those persons to the non-public pool, FINRA has diluted the entire purpose of having a non-public pool – to provide parties with the option of at least one arbitrator with industry expertise on the panel. Claimants’ attorneys do not have industry expertise; they have lawyering expertise.

I think FINRA should scrap its classification system entirely and just have one pool of qualified professionals as arbitrators, and let the parties choose the type of experience, expertise and affiliations they want from their arbitrators.

                       

Jill Gross

Professor Jill I. Gross has been a director of the Investor Rights Clinic (formerly the Securities Arbitration Clinic) since 1999. Professor Gross teaches the Investor Rights Clinic and Seminar, Mediation and Arbitration, and Securities Litigation and Enforcement. She has published numerous law review articles in the area of dispute resolution… MORE >