Read the latest news relating to investor claims and broker fraud.

Aggieved Investors Granted Permanent Option of All Public Arbitration Panels

On Feb. 1, the SEC approved a FINRA proposal to permanently offer investors the option of an all-public arbitration panel. In the past, the majority of FINRA three-person arbitration panels included two public arbitrators and one industry-affiliated arbitrator.

While the industry-affiliated arbitrator might be helpful in certain cases, the required inclusion of an arbitrator with ties to the securities industry made many investors uneasy and provoked claims of bias and potential conflicts of interest. To address investor concerns, FINRA began to operate a pilot program a little over two years ago that allowed participants the choice of a three-person panel made up entirely of non-industry-affiliated arbitrators.

The program was a huge success with investors. According to a FINRA news release, almost 60 percent of the participants in the program who were given the option of the all-public panel took it. Due to its success, the program (originally scheduled to end in October of 2010) was extended an additional year, and FINRA proposed a permanent all-public option to the SEC.

In a Feb. 1 news release, which discussed the SEC's decision, Richard Ketchum, FINRA Chairman and CEO, noted the "strong support from investor and consumer groups for giving arbitration customers the right to decide" and said that FINRA believes the decision will "increase public confidence in the fairness of our dispute resolution process."

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