Securities Arbitration Participants Say Process Is Unfair
According to a study conducted for the Securities Industry Conference on Arbitration (SICA), most securities customers involved in arbitration do not believe that the process is fair to all parties and reported dissatisfaction with the outcome of their disputes.
Compiled by Cornell University’s Survey Research Institute, An Empirical Study: Perception of Fairness of Securities Arbitration summarized the responses of 3,000 participants on both sides of arbitration cases. Although most participants believed the arbitration panel appeared competent, only 40% believed the arbitration panel was open-minded. Participants were split on whether the process is economical. Most desired an explanation of the awards.
The report was immediately seized on by state securities regulators who demanded removal of industry representatives from arbitration panels.
In a statement issued by the organization of state securities regulators, NASAA noted “The SICA study’s results are disturbing and they support what state regulators have been hearing from investors in their states – investors believe that the arbitration forum they are forced to participate in is rigged against them.”
Critics of the study noted that only 13% of the surveys were returned.
