NASAA’s Statement on FINRA’s Arbitration Pilot Program Expansion


To follow up on our recent posts on securities arbitration (available here and here) we thought that you would like to know that the Financial Industry Regulatory Authority (FINRA) announced on October 5, 2009 the expansion of its two-year pilot program that gives investors who are filing claims the option to select an arbitration panel composed of three public arbitrators instead of two public and one non-public. Read more about the pilot program at FINRA’s website: FINRA to Expand Program Evaluating All-Public Arbitration Panels.

Following is also a October 5, 2009 statement by North American Securities Administrators Association (NASAA) President and Texas Securities Commissioner Denise Voigt Crawford regarding the expansion of FINRA’s pilot program:


“Regardless of the scope of FINRA’s pilot program on the composition of arbitration panels, a greater issue remains – the mandatory ‘take-it-or-leave it’ clause in brokerage contracts, which forces all investors to agree to mandatory, industry-run arbitration administered by FINRA, the securities industry self-regulatory organization.”

“The only chance of recovery for most investors who fall victim to Wall Street wrongdoing is through a single securities arbitration forum controlled by the securities industry. NASAA believes that the securities arbitration system should be truly voluntary and that Congress should end mandatory securities arbitration.”

On October 6, 2009 Texas Securities Commissioner Crawford testified before the U.S. House Financial Services Committee about regulatory reform. Find the text of the complete testimony here. Also find links to prepared testimony of all invited witnesses to the hearing: Capital Markets Regulatory Reform: Strengthening Investor Protection, Enhancing Oversight of Private Pools of Capital, and Creating a National Insurance Office.

Any thoughts?

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Victoria VanBuren
Victoria VanBuren is the voice of the acclaimed “Disputing” blog. She assists Karl Bayer with his publications. Prior to becoming the blogmaster, Victoria obtained a law degree from UT Law and worked as an attorney for a boutique intellectual property firm.

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