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FINRA Forms Arbitration Task Force
Posted on Categories ADR Generally, NewsTags , ,

As we were set to publish this week’s Arb Alert, word arrived in the form of a FINRA Press Release that the Authority has formed a new Arbitration Task Force, whose commission it will be to make recommendations for improving the forum.

According to the News Release, which is dated July 17, 2014, FINRA wants ideas on how to enhance the transparency, impartiality, and efficiency of FINRA’s securities arbitration forum for all participants.” In that regard, the 13 Task Force members comprise a mix of industry, investor and claimant advocates, neutrals and regulators: They are Chairperson, Barbara Black, Professor and Director, Corporate Law Center, University of Cincinnati College of Law; and in alphabetical order: Philip Aidikoff, investor attorney, Aidikoff, Uhl & Bakhtiari; Joseph Borg, Director, Alabama Securities Commission; Philip Cottone, FINRA non-public arbitrator and mediator; John Cullem, FINRA public arbitrator; Sandra Grannum, industry attorney, Davidson & Grannum; Mark Maddox, investor attorney, Maddox Hargett & Caruso; Kevin Miller, General Counsel & Chief Compliance Officer, Securities America; Joseph Peiffer, investor attorney, Peiffer Rosca Abdullah Carr & Kane; Barbara Roper, Director of Investor Protection, Consumer Federation of America; Lisa Roth, CEO, Keystone Capital Corporation; Edward Turan, Managing Director, Citigroup Global Markets; and Harry Walters, Managing Director, Morgan Stanley Wealth Management. FINRA adds that the Committee’s composition yields seven public members and six industry members. In the view of FINRA’s arbitration head, Linda Fienberg, the Authority has “assembled a top-notch group with diverse experience that will guide their recommendations for the future of the forum.”

The plan calls for the Task Force to meet periodically and to make its recommendations by some time next year to FINRA’s National Arbitration and Mediation Committee, which is “FINRA’s Standing Board Advisory Committee.” FINRA Chairman and CEO, Richard Ketchum, described the mission of the group, thusly: “Arbitration plays an essential role in establishing a fair, timely and cost-effective process for resolving disputes between investors and brokers. This task force brings together a diverse group … and I am confident that their recommendations will help ensure FINRA’s arbitration process continues to serve the needs of the investing public.”

(ed: First reaction to the news is favorable. FINRA needs to get proactive about the eventual SEC review, a la Dodd-Frank, of broker-dealers’ use of pre-dispute arbitration agreements. Much will depend upon FINRA and the securities industry showing securities arbitration to be sui generis, a case apart from the banks and other financial institutions over which the CFPB will exercise its Dodd-Frank powers. Indeed, we wonder whether the Task Force’s creation means that the SEC has scheduled when it will commence its review, i.e., some time in 2015.) (SAC Ref. No. 2014-26-01)