ADR Prof Blog by Andrea Schneider, Michael Moffitt, Sarah Cole,Art Hinshaw, Jill Gross and Cynthia Alkon.
FINRA announced today the formation of a new Arbitration Task Force “to consider possible enhancements to its arbitration forum to improve the transparency, impartiality and efficiency of FINRA’s securities arbitration forum for all participants.” The 13-member Task Force will be Chaired by Professor Barbara Black, my former colleague and frequent co-author, and will include forum arbitrators, representatives from the securities industry, investor advocates and attorneys, industry attorneys and a regulator.
Because virtually all broker-dealers require their customers to arbitrate their disputes, FINRA’s arbitration program, which administers virtually all of these disputes, continues to be criticized as some investors perceive the process is unfair. FINRA last appointed a task force to conduct a wholesale examination of its arbitration forum in the mid 1990's, when David S. Ruder (Professor of Law Emeritus, Northwestern) chaired the Arbitration Policy Task Force that issued a January 1996 report to the Board of Governors of NASD (FINRA’s predecessor). The “Ruder Report,” as it is known, led to many important reforms of the process.
Given my respect for Professor Black, I have no doubt that the “Black Report” will contain similarly significant recommendations to increase the fairness for all disputants.