Contracts of Adhesion and Securities Arbitration: How FINRA Attempts to Mitigate Harm to Investors
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By Christian Mercado*

Introduction

The securities industry is an example of one attempting to mitigate equity concerns surrounding arbitration agreements contained in contracts of adhesion. In the United States, disputes arising from a customer-broker contract or agreement mandating arbitration are almost invariably heard by one specific and centralized ADR provider. In this case, that central entity is the Financial Industry Regulatory Authority, Inc. (“FINRA”) which is directly regulated by the Securities and Exchange Commission. This article analyzes how arbitration clauses born from contracts of adhesion are treated within the securities industry. It further examines how FINRA’s policies have fared in mitigating the potential harm of contracts of adhesion for unsophisticated investors.

Back to Basics

In his 1933 work, “The Basis of Contract,” Morris R. Cohen proposes that the development of modern contracts stemmed from the need of commercial and industrial enterprises to anticipate the future.[1] Almost ninety years ago he observed that, in an ever-expanding global economy, transactions between private individuals embodied more than an immediate exchange of merchandise between neighbors. Modern transactions relied on agreements that called for the exchange of goods and services across continents and over long periods of time. Without an adequate and efficient way to enforce these agreements, transactions carried a significant amount of risk. This associated risk affected prices and was a burden for both producers and consumers. It is from this dilemma that modern-day contract law formed. By having two parties consent to a legally binding agreement that would govern their performance, each side was given an assurance that their agreement would either be upheld or that they would have access to an adequate court-ordered remedy, including monetary damages or specific performance.

Within these contracts, parties express their desires in individual clauses as to what performance under the agreement entails. Each clause is intended to clearly define the duties, rights, and privileges of each adjoined party. Parties can introduce, remove, and modify clauses to ensure that the document reflects performance that is beneficial to them with the condition of mutual assent. In the interest of mitigating risks and losses, some clauses may seek to reduce litigation options by precluding potential claimants from pursuing class action lawsuits, precluding certain claims, limiting potential recovery, or determining the controlling law. In doing this, parties are reducing the uncertainty of litigation and as a result, reducing the risk and associated costs of doing business. However, these options do not eliminate the risk of litigation before the courts.

The ADR Option

In the American context, courts are expensive, time consuming, public, and do not allow parties to choose their decision maker.[2] These characteristics can be detrimental to litigants on both sides of a dispute. For parties involved in litigation centered around complicated and niche areas of law, the inability to choose a fact finder who is an expert in the given area increases the risk that an inequitable award will be rendered. For potential claimants, obtaining relief may take years with no concrete promise of recovery. For potential respondents, the public filing of a complaint can be detrimental to a businesses’ public image, even if an eventual judgment is favorable. From these concerns, clauses mandating alternative dispute resolution (“ADR”) have become commonplace in commercial contracts for parties seeking to avoid the drawbacks of having a dispute resolved via the courts. ADR agreements provide a potentially cheaper, quicker, and more discreet dispute resolution option. Much like the container contracts they are attached to, clauses mandating ADR owe their legitimacy to the fact they are intended to embody the expressed interests and desires of the involved parties.

In ADR clauses, parties seeking to avoid the unpredictable costs and risks of litigation would allocate the authority to facilitate settlement discussions or act as the binding decision maker to a third party. The most common form of ADR is arbitration. While the courts retain the right to confirm an award, vacate an award, and decide on the validity of the arbitration agreement, any dispute the parties have assigned to the arbitrators can only have a decision made by the appointed arbitrator or tribunal. However, what happens when an arbitration agreement is not the product of true mutual assent? What happens when the contact in which the arbitration clause is embedded is not occurring between two equally sophisticated parties? What happens when there is a severe disparity in power and the container contract is presented as a “take it or leave it” boilerplate contract with no room for alterations or discussion? What happens when the arbitration clause is included within a contract of adhesion?

While American courts sometimes void provisions and clauses within contracts of adhesion because of the possibility of unequal bargaining power, unfairness, or unconscionability, arbitration clauses themselves are rarely voided and those seeking recission of arbitration clauses are rarely successful.[3]In fact, arbitration clauses are treated as their own separate, enforceable contracts independent of the container contract they were included within. In doing so, the courts have created questions of public policy regarding consent and the right to contract. This is a question present in areas of law where larger sophisticated entities contract with smaller unsophisticated parties. Disputes dealing with labor and employment, consumer, or personal injury issues frequently encounter this problematic dynamic and this question of “consent.”

Origins of the Obligation to Arbitrate

It is important to note that arbitration can be agreed to in two ways:  parties may either consent to arbitration after a dispute has arisen, or they can agree in advance to arbitration in anticipation of potential disputes. Within the context of the securities industry, “future dispute” arbitration agreements are for the most part contained within the initial customer account contract.[4]

What is a Contract of Adhesion?

When boilerplate contracts are proposed by a dominant party, they are put forth as “take it or leave it” offers that cannot be altered. The party proposing this form of a contractual obligation is usually a business with stronger bargaining power, while the opposing party will tend to be an unsophisticated individual. This scenario is common for employees or consumers contracting with a much larger employer, merchant, or service provider. The unsophisticated individual party typically does not have the ability to negotiate or modify the terms of the controlling contract and impose their own desires and interests on the agreement. These contracts are known as contracts of adhesion and they tend to be scrutinized by American courts because of the possibility of unfairness and unconscionability.. Courts will on occasion make entire contracts or specific provisions unenforceable to mitigate harm to weaker parties.

Contracts of Adhesion and Arbitration

While courts are critical of contracts of adhesion, they rarely, if ever, deem arbitration clauses attached to them as unenforceable. This stems from how the courts have approached analyzing consent. Consent can be described as having two areas of focus. One side focuses on the power of private parties to create the contract to arbitrate and decide its terms. On the other side, you have the scope of freedom from contract. How much may one party with superior bargaining power interfere with the consent and desires of a weaker and more vulnerable party? Controlling American jurisprudence has overwhelmingly focused on the first focus while ignoring public policy questions surrounding the second focus.

For example, American courts have ruled that a challenge to the container contract does not immediately lead to a challenge to the arbitration clause. This distinction is based on the "separability doctrine" which was first articulated by the Supreme Court in Prima Paint Corporation v. Flood & Conklin Manufacturing Company.[5] In this case, Prima Paint Corporation of Maryland alleged that Flood & Conklin Manufacturing Company of New Jersey had misrepresented itself in an acquisition transaction, and as a result the contract between the two was void, including the arbitration agreement embedded therein, because of fraud in the inducement. Flood & Conklin argued that that the arbitration clause was still enforceable and moved to stay the court action, alleging that the arbitrators had sole jurisdiction of the matter as assigned to them by the parties. The Supreme Court concluded that, because the Plaintiff was challenging the underlying contract generally rather than the broad arbitration clause specifically, a determination on whether the Plaintiff's fraudulent inducement claims were valid needed to be heard by an arbitrator and not a judge. Both parties in this case were sophisticated and were aware of the existence of the arbitration agreement. Since the arbitration clause itself was not challenged, the arbitrators would be acting within the scope of their authorization. In ruling this way, the Supreme Court allowed for the arbitration clause to be "separable" from the container contract. The doctrine would not apply in situations where parties claim that they never agreed to arbitrate or that they were fraudulently induced into signing an arbitration agreement.

The "separability doctrine" would only further be strengthened by later Supreme Court cases such as Buckeye Check Cashing, Inc. v. Cardegna.[6] In Buckeye, borrower John Cardegna had signed a contract for a loan from Buckeye Check Cashing that included a clause via which Cardegna agreed to resolve any controversies over the loan through arbitration. Cardegna later sued Buckeye, claiming that the conditions for the loan stipulated by the contract were illegal. Buckeye filed a motion to have the case resolved by arbitration in accordance with the arbitration clause. This Motion was denied by the lower court. Florida’s Supreme Court affirmed the denial on appeal, and the Supreme Court of the United States granted Certiorari. The Court later reversed the decision, and Justice Scalia’s majority Opinion repeated that: "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance.”

An important distinction between Buckeye and Prima Paint is the characteristics of the parties. Prima Paint dealt with two sophisticated parties acting in the normal course of business. Buckeye dealt with a contract and arbitration clause between a relatively sophisticated party and an unsophisticated individual consumer. In Buckeye, arguments relying on the limited bargaining power of Cardegna and the potential unconscionability of the contract containing the arbitration clause were unsuccessful in swaying the court to deem the arbitration clause unenforceable. As a result, outside of limited challenges to an arbitration clause, arbitration in most consumer contracts are considered valid, regardless of the disparity in bargaining power.

On What Grounds Can an Arbitration Clause Be Deemed Unenforceable?

Following Prima Paint and Cardegna, any challenge to the arbitration clause must challenge the clause itself. When challenging an arbitration clause, there are limited grounds to pursue.

Deficient Arbitration Agreement

Pursuant to the Federal Arbitration Act (“FAA”), three elements must be present for an arbitration agreement to be considered valid.[7] First, the parties must identify which disputes would be subject to the arbitration agreement. The FAA states that an arbitration agreement must reference “a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal” in order for the agreement to be enforceable.[8] Parties can limit arbitrator authority to disputes that already exist, or they can give arbitrators authority to decide all future disputes arising out of a given transaction. This requirement identifies what the scope of the agreement is and under section 10 of the FAA, an arbitrator’s award can be vacated for exceeding authority set out in the arbitration agreement.

The second FAA requirement is the explicit allocation of authority to the arbitrators to issue a final and binding judgment by the participating parties. In doing so, the parties allocate jurisdiction over the dispute to the arbitrators and take it away from courts of general jurisdiction that would normally oversee the matter. Under the FAA, valid arbitration agreements and their judgments “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”[9] Also, the court is obligated to respect the desires of the consenting parties if it does not violate State or Federal laws relating to contracts or public policy concerns.

The final FAA requirement is that an arbitration agreement be in writing. Section 2 of the FAA states that: “A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction … shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”[10] While the FAA clearly states that an agreement must be in writing, what is considered “writing”?  When the FAA was passed in 1926, the general understanding of what was considered writing was straight-forward: any agreement presented to a party that was printed or handwritten was enough to meet the FAA’s writing requirement. However, since 1926, the practice of law has undergone some substantial changes.

Following Campbell v. General Dynamics Gov’t Sys. Corp., an email agreement to arbitrate was found to have satisfied the FAA’s writing requirement for an arbitration agreement.[11]  Further, consent to an arbitration agreement does not even have to be written. The court in Tinder v. Pinkerton Sec. ruled that, while the FAA requires arbitration agreements to be written, it does not require them to be signed to prove consent.[12] Thus, parties can meet the FAA’s writing requirement by providing evidence that the agreement was finalized and presented as an electronic document like an email, or as a physical document in print. Consent can then be agreed to expressly with written consent or via partial performance like other contracts.

Summing up: If a proposed arbitration agreement identifies the scope of the agreement, provides the arbitrators the consent to make a final and binding judgment, and satisfies the FAA’s writing requirement, then the arbitration agreement is valid, and the parties can be compelled to arbitrate. If any of these requirements is deficient, a valid challenge to the arbitration clause exists.

Traditional Contract Law Claims

Outside of a deficiency in an FAA requirement, traditional contractual challenges can also be used to attack an arbitration clause. Just like all other contracts, arbitration agreements must have been offered and accepted, the arbitration of the dispute must be a viable and legal right, all the involved parties must have the capacity to consent to a legally binding agreement, and adequate consideration must result from the transaction. If one of these requirements is not met, those are grounds for voiding the agreement and making it unenforceable. Just like all other contracts, parties can challenge the presence of one of these requirements in an arbitration agreement by alleging fraud or misrepresentation, duress or coercion, lack of capacity, or impossibility.

State Statutes

Parties seeking to prove an arbitration clause is unenforceable may use an applicable state statute to do so. The FAA does not contain an express preemption provision, nor was it intended to be the exclusive codified arbitration law in all circumstances.[13] However, state anti-arbitration statutes (or rules of law) have rarely been upheld when federal courts have ruled on their potential conflicts with the FAA’s broad enforcement reach. That is what happened in AT&T Mobility LCC v. Concepcion, where a class action suit was brought in a California federal district court on behalf of customers against AT&T Mobility LLC.[14] The lower courts denied motions to dismiss from AT&T based on a class action waiver within the arbitration agreement. These decisions were based on California’s unconscionability law, which prohibits contracts that “unfairly exculpate one party from its wrongdoing.”[15] The class action waiver acted as an exculpation of AT&T’s wrongdoing since individual costs of arbitration would dwarf any potential individual arbitration award. The California courts were acting within the authority given to it within the FAA, which allows an arbitration clause to be unenforceable if it violates “grounds as exist at law or in equity for the revocation of any contract”.[16]

The Supreme Court reversed. Justice Scalia’s Opinion focused on the impact of California's unconscionability rule of law and argued that requiring the availability of class-wide arbitration interferes with the “fundamental attributes of arbitration” stated in the FAA, specifically the rights of parties to choose what their arbitration looks like. The Court reached this conclusion despite the California courts acting within the apparent authority given to them within the FAA.

Contracts of Adhesion and Securities Arbitration

Within the securities industry, the concerns surrounding contracts of adhesion and arbitration are just as present as any other industry. Renowned securities expert Joel Seligman characterized the idea that securities arbitration is voluntary for investors as one of “legal fiction.”[17] While it is not mandatory for all investor agreements to include an arbitration clause directing all disputes to FINRA, retail investors that “shop around” for a broker-dealer that would be willing to open a new customer account without an arbitration clause would find it very difficult, if not impossible, to find a broker willing to delete the PDAA.[18] As a result, the realistic implications are that arbitration at FINRA is mandatory for most, if not all, retail investors. This is true even if the container contract is one of adhesion. As established by the courts’ broad interpretations of the FAA and the protection it gives arbitration clauses, outside of rare and limited challenges to an arbitration clause, most investors must bring their disputes to FINRA. Because of this, securities arbitration already gives off at least the appearance that the importance of consent has been diminished.[19]

While retail investors -- like most other unsophisticated parties -- are essentially forced into arbitration, what distinguishes the securities industry is that virtually all securities-related arbitrations within the United States are overseen by one central entity,[20] FINRA. The Authority, a private corporation that acts as a self-regulatory organization that is overseen by the SEC, is given the authority to oversee customer arbitrations related to US-traded securities. FINRA has created a specialized dispute resolution forum with its own defined rules, procedures, and guidelines that consistently apply to both investors and brokers. As a result of this centralized arbitration structure, some of the harms unsophisticated parties face in arbitration have been mitigated.

FINRA’s Efforts to Mitigate Harm of Mandatory Arbitration

FINRA actively attempts to reduce harm to unsophisticated investors involved in disputes with broker-dealers. It accomplishes this throughout the arbitration process: before a claim is filed; during discovery; at the hearing; and in the aftermath of an award.

Unlike other ADR providers, FINRA is involved in the pursuit of fairness long before any investor action has been commenced. Beyond offering dispute resolution options, FINRA actively mitigates harm to vulnerable investors by acting as a regulatory authority within its industry and promulgating its own notices and regulations. For example, FINRA issued a Regulatory Notice that governed not only the content of advertisements broker-dealers posted online that could potentially misinform vulnerable investors, but it also required brokers to keep detailed records of these postings in case of any disputes.[21] When disputes arise between investors and brokers, the fact that broker-dealers have notice of these FINRA regulations prior to any dispute, expedites discovery and  allows for harsher scrutiny of broker conduct to the benefit of an investor.

The reliability and fairness of FINRA’s regulations are strengthened because the Authority is regulated by an independent federal agency, the SEC. Proposed rule and policy changes  must proceed thru a multi-step process[22] that includes filing the rule with the SEC, which publishes notice of this rule to allow for public comment. In that sense, not only does the SEC act as another set of eyes in the pursuit of equity, but investors and their advocates can mold and shape these rules directly themselves.

While FINRA’s overall regulatory practices aim to reduce harm to investors before a dispute has occurred, its arbitration rules and procedures further continue this effort. Much like other ADR providers, FINRA has its own rules and guidelines that apply within its proceedings. Specifically, FINRA has its own Code of Arbitration Procedure for Customer Disputes, consistently applied to all investor-related matters. FINRA’s Code of Arbitration is investor-friendly and provides several procedural benefits, including: a fee structure favorable to investors; the automatic serving of the statement of claim to the broker-dealer; the selection of hearing locations favorable to the investor; and the limitations in place regarding motions to dismiss made by respondents prior to an investor/claimant resting their case. Further, FINRA allows investors to circumvent a pre-dispute arbitration clause if they chose to pursue their claim in a class action.[23] In doing so, FINRA mitigates the costs and risks of pursuing relief by allowing investors the option to split the costs of litigation. Additionally, and of key importance, FINRA Rule 2268 regulates the content and placement of PDAAs to ensure investors have proper notice and fairness.

Outside of these procedural measures, FINRA’s  Code of Arbitration also provides investors with substantive benefits, specifically in relation to discovery. The Code of Arbitration reduces costs of litigation for investors by having a predetermined list of presumptively “discoverable” documents for both investors and broker-dealers.[24] Outside of unique situations where parties can argue against this presumption, both sides have an expectation and guidance as to what they should receive and have access to. Further, outside of just reliance on these documents, investors benefit from this rule in circumstances where a broker-dealer fails to produce documents on the list without a viable reason. Arbitrators will consider this production deficiency and the notice broker-dealers had and will potentially paint the conduct of the broker-dealer to the benefit of the investor.

FINRA’s mitigation efforts continue even after an award is issued by an Arbitrator. For example, arbitrators can report brokers for egregious violations and conduct during or after a hearing, going beyond strict confidentiality present in other arbitration contexts. This allows for criminal investigations in extreme circumstances to protect the public. FINRA also makes award information from customer disputes public on their Website, allowing for more transparency than is normally available in arbitration. Finally, FINRA facilitates the payment of awards by punishing brokers who do not comply and revoking licenses. While Investors always retain the right to confirm an award with a court, FINRA’s practices incentivize brokers to comply and allow investors to receive their funds sooner outside of costly motion practice in the courts.

Perceived Problems Still Present in FINRA Arbitration

While FINRA has been successful in significantly eliminating much of the harm investors might experience due to mandatory arbitration in the securities industry, unsophisticated parties may still be prejudiced by some of the basic characteristics of arbitration, despite FINRA’s efforts. These characteristics of arbitration, which can be considered benefits for truly consenting parties, become significant issues when that choice is taken away in a pre-dispute arbitration agreement (“PDAA”) attached to a contract of adhesion. For example, while FINRA publishes arbitrator awards to the public, these disclosures are limited in the scope of the information they provide. Unlike a court opinion that depicts any awarded relief and the rationale used by the court to reach that decision, FINRA’s awards for the most part describe only the relief awarded without including the rationale of the arbitrator unless all parties request the same before the hearing.[25]

The omission of the arbitrator’s rationale from these public documents precludes investors from referencing prior arbitrations to assist with substantive arguments in separate cases. This is compared to the public nature of court opinions, where litigants have the benefit of precedent to strengthen legal arguments and clarify important issues. Because of the mandatory nature of securities arbitration, this is a potential prejudice imposed on an investor rather than one they willingly chose. Following this same premise, the deference given to an arbitrator’s award can also be detrimental to investors forced into arbitration. While the finality of an arbitration award could be a beneficial characteristic because of the elimination of costs and delays associated with an appeals process, the limited review afforded to these awards could be disadvantageous to unsophisticated parties that receive an erroneous and unfavorable award. If the matter were before a court instead of an arbitration panel, an investor would retain the right to have a higher court scrutinize the decision. In contrast, FINRA itself has no formal appeals process, and any scrutiny by a court is limited to an analysis of procedural fairness. As a result, investors stuck with an erroneous and unfavorable arbitration decision are likely unable to appeal outside of extreme circumstances violating procedural fairness or equity.

Conclusion

This article demonstrates that, outside limited challenges to an arbitration agreement under the FAA or state law, arbitration clauses are, for the most part, upheld and deemed enforceable, even if they were formed under circumstances that could invalidate other contracts. In response, FINRA has been successful in significantly mitigating the potential harm to unsophisticated investors in the securities industry thru mandatory arbitration. Despite these great efforts, the lack of consent investors have in agreeing to arbitration is enough to still raise questions of equity despite FINRA’s best efforts. The reason for this is not because the securities arbitration process is by itself unfair, but because the mere perception of fairness requires a choice for the weaker unsophisticated party.[26] Until Congress changes the body of federal law governing arbitration[27] or FINRA expands opt-out privileges to investors outside of those joining a class action, arbitration clauses included in contracts of adhesion will continue to harm investors despite FINRA’s efforts to mitigate harm throughout the process.

________________

*Christian Mercado is currently a third-year law student at Fordham University School of Law who has worked within the school’s Securities Litigation & Arbitration Clinic for two semesters. While with the clinic, he participated in the process of successful negotiations with a large broker-dealer as well as being a part of a litigation team that will argue a case before FINRA this winter. He thanks Fordham Law Prof. George Friedman for his guidance in preparing this article. The author may be reached at cmercado13@fordham.edu.

ENDNOTES: 

[1] Morris R. Cohen, The Basis of Contract, 46 Harvard Law Review 553 (1933).

[2] Christopher Baum, The Benefits of Alternative Dispute Resolution in Common Interest Development Disputes, 84 St. John's L. Rev. 907 (2010).

[3] James V. Jordan & Judith B. Gitterman, Franchise Agreements: Contracts of Adhesion?, 16 Franchise L.J. 1 (1996).

[4] Customers under FINRA Rule 12200 also have the right to demand arbitration of existing disputes with brokers, irrespective of whether there is a PDAA. The article will solely focus on arbitration agreements involving securities disputes presumptively agreed to as clauses within a larger “boilerplate” contract. When arbitration is agreed to after a dispute arises, and not as a clause within a larger document, the implication that the clause was imposed by the more powerful party, or was hidden in the boilerplate, is not present, https://www.finra.org/rules-guidance/rulebooks/finra-rules/12200.

[5] Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967), https://casetext.com/case/prima-paint-corp-v-flood-conklin-mfg-co.

[6] Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006), https://www.law.cornell.edu/supct/html/04-1264.ZO.html.

[7] 9 U.S.C.A. § 2 (West), https://uscode.house.gov/view.xhtml?path=/prelim@title9/chapter1&edition=prelim.

[8] Id.

[9] Id.

[10] Id.

[11] Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 556 (1st Cir. 2005), https://casetext.com/case/campbell-v-general-dynamics-government-systems-corporation.

[12] Tinder v. Pinkerton Sec., 305 F.3d 728, 736 (7th Cir. 2002), https://caselaw.findlaw.com/us-7th-circuit/1155787.html.

[13] 9 U.S.C.A. § 1 (West), https://uscode.house.gov/view.xhtml?path=/prelim@title9/chapter1&edition=prelim.

[14] AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011), https://www.law.cornell.edu/supct/html/09-893.ZO.html.

[15] Id.

[16] 9 U.S.C.A. § 2 (West).

[17] Joel Seligman, The Quiet Revolution: Securities Arbitration Confronts the Hard Questions, 33 HOUS. L. REV. 327 (1996).

[18] Id at 345.

[19] Id.

[20] This article focuses on FINRA customer-broker arbitration. Some customer-investment advisor (IA) arbitrations are heard by competing ADR institutions such as AAA or JAMS; FINRA does not regulate IAs.

[21] In January 2010, FINRA issued Regulatory Notice 10-06, providing guidance on the application of FINRA rules governing communications with the public to social media sites and reminding firms of the recordkeeping, suitability, supervision and content requirements for such communications, https://www.finra.org/rules-guidance/notices/10-06.

[22] See https://www.finra.org/rules-guidance/rulemaking-process.

[23] See FINRA rule 12204, Class Action Claims, https://www.finra.org/rules-guidance/rulebooks/finra-rules/12204.

[24] See FINRA rule 12506, Document Production Lists, https://www.finra.org/rules-guidance/rulebooks/finra-rules/12506.

[25] See FINRA rule 12904(g), https://www.finra.org/rules-guidance/rulebooks/finra-rules/12904.

[26] See Black, Barbara & Gross, Jill, When Perceptions Changes Reality: an Empirical Study of Investors’ Views on the Fairness of Securities Arbitration, 2008 J. Dispute Res. 349 (2009).

[27] A real possibility if the Democrats take control of the Senate.

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