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—SIFMA, through its Arbitration Committee, today submitted a supportive comment letter to the Financial Industry Regulatory Authority (FINRA) on their proposal to continue and expand a pilot program that gave investors the option of choosing an all-public arbitration panel.
“Securities arbitration is a proven dispute resolution process that is fair, timely and cost effective for everyone, particularly investors,” said Ira Hammerman, senior managing director and general counsel at SIFMA. “We believe the last two-plus years have proven the success of the pilot program for investors—regardless of whether they choose an all-public panel, or to retain an industry arbitrator. Accordingly, we support FINRA’s expansion of the program to all brokerage firms.”
The pilot program was made possible by the voluntary agreement of SIFMA member firms, first beginning with 11 firms in 2008, and expanding to 14 firms in 2009. Having worked with FINRA since the beginning on the pilot program, and seeing its success, SIFMA supported FINRA’s proposed expansion of the pilot program to apply to all brokerage firms.
In its comment letter, however, SIFMA noted that the current pilot program applies only to disputes between customer claimants and brokerage firms, not individual brokers who are named as respondents. Under the proposed expansion, the pilot program would extend to all disputes between customer claimants and brokerage firms and/or individually named brokers. SIFMA believed that the proposed expansion should not cover cases involving individually named brokers as a fundamental issue of fairness.
SIFMA stated that including a non-public arbitrator in cases involving individual brokers would benefit both parties by providing the appropriate education about relevant financial products and services, industry customs and practices, and other legal industry-related issues.
SIFMA’s letter can be found at the following link: www.sifma.org/issues/item.aspx?id=22474.
