By George H. Friedman, SAA Editor-in-Chief
The first Coronavirus-related arbitrations may be on the way, caused by a trading platform’s alleged crash as the market was bouncing back in a record way. And the SIFMA C&L Annual Seminar has been cancelled due to virus concerns.
We covered in SAA 2020-09 (Mar. 4) a new blog post, What’s Past is Prologue – All Over Again. What’s Ahead for Arbitration Filings in the Wake of Recent Volatility, authored by the Alert’s George H. Friedman and Rick Ryder. The authors noted the crashing and recovering (and crashing and recovering…) capital markets in the wake of the worldwide Coronavirus outbreak, and reflected on what these events might mean for FINRA’s arbitration case filings and forum participants.
Check Off This Prediction
One area covered was the potential for more claims based on technical execution failures. Said the blog: “Here, the customer complains about not being able to reach their broker by phone or online during rapid market declines (‘I called and called trying to sell and could not get through. And your online trading platform was useless.’). Firms tend to say that the investor’s experience was not unusual given market conditions (‘Our performance was not unusual given market conditions at that time’).” Think of the technical glitches when Facebook went public in 2012. Already, we’ve seen the first indications of Corona Crash-related FINRA filings to come. A March 4 Business Insider article, Angry Robinhood Users Say they Missed Out on Making Thousands During the Stock-trading App’s Outages, but a Big Class-Action Suit is Unlikely, reports: “When Robinhood faced outages Monday and Tuesday, users were locked out of the biggest market rally in 12 years. Now, some users are calling on federal regulators to investigate the commission-free trading app…. [As to arbitrations], FINRA rules set forth narrow circumstances for joint complaints stemming from shared transactions, meaning complainants against Robinhood would likely have to go it alone. The Robinhood Class Action Twitter account seemed to acknowledge as much Wednesday afternoon, telling its followers that individual cases were the most likely path forward.”
Unforeseen Fallout: SIFMA C&L Annual Seminar Cancelled
The Friedman-Ryder blog post addressed the potential Coronavirus impacts on arbitration filings, scams, and online ADR use. One thing they didn’t write about was event cancellations. We reported in SAA 2020-04 (Jan. 29) that the SIFMA Compliance & Legal Society’s 2020 Annual Seminar would be taking place March 15 – 18 in Orlando. However, SIFMA has announced that the event has been cancelled due to the virus. Says the announcement: “For 52 years, this event has been the preeminent meeting place for compliance and legal professionals in the financial services industry. Unfortunately, however, circumstances beyond our control have made it impossible to proceed with the event this year. This is primarily due to restrictions on non-essential travel implemented by many of SIFMA’s member firms and other organizations that impact the ability of our speakers, sponsors and other attendees to participate in the event, as well as public health and travel advisories, difficulties with domestic air travel, and other recent events related to the spread of the novel coronavirus COVID-19.” Full refunds are being given.
… and Law Schools Suspend In-person Activities: Impact on Clinics?
Several law schools have suspended in-person activities, and have shifted classes to online teaching platforms. We did a quick check, and in the New York City area alone, Cardozo, Fordham, New York, Pace, St. John’s, and Seton Hall Law Schools have all suspended in-person events and classes. All of these schools have securities arbitration clinics that are undoubtedly impacted to some degree. We will track this going forward, but as the blog post said, “Absent an effective vaccination or treatment, we expect that as time goes by there will be growing resistance from arbitration participants to physically assemble for a hearing. ADR providers may also have similar qualms. To us this portends increasing interest in and usage of online ADR.”
(ed: *On the other hand, the NYSBA’s Securities Arbitration 2020: Deep Dive seminar took place as scheduled on March 6. We will report on it in an upcoming Alert. **We expect that other impacts will unfold as time goes by. We’re guessing it’s just a matter of time before in-person arbitration hearings are impacted. ***We will track upcoming events and tweet and report on them as needed. Also, readers should also check our Website’s calendar for updates. ****As discussed in “Short Briefs,” FINRA has issued a Regulatory Notice on firm obligations related to the Coronavirus.) (SAC Ref. No. 2020-10-01)
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