According to a recent Bloomberg News article FINRA arbitrators are "dubious, asleep, sometimes dead." The article makes the case that FINRA should do more to ensure that its arbitrators are up to snuff. And FINRA could do more.
But the article contains for the most part anecdotal information. Little in the way of hard data shows up to support the notion that the horror stories presented in the article are common place. To be sure such data is hard if not impossible to come by. Still, reporting that in 1994 nearly 9 out of 10 arbitrators were white men over age 60 is stale news. The story may be that the only real information on the demographics of FINRA arbitrators is now 20 years old -- but if that is the case the article does not make that absolutely clear.
I cast my vote in favor of arbitrator pools that are larger, more diverse, vetted more carefully, and (as FINRA has recently begun to address) afforded greater compensation. But for those who prefer the jury system, we have a long way to go before jurors are paid adequately for their time (they are not), and more could be done to ensure diverse and well vetted jury pools as well. As for federal judges, 70% are white men, although that has been changing.
When criticizing the FINRA arbitration process one would do well to ask, "compared to what?"
News and commentary from the Financial Services attorneys at Preti Flaherty.
