(Source: Business Wire)
The Financial Industry Regulatory Authority (FINRA) announced today the
expansion of its two-year pilot program that gives investors who are
filing eligible claims the opportunity to select an arbitration panel
composed of three public arbitrators instead of two public and one
non-public.
In its second year, the pilot will expand from 11 to 14 broker-dealers,
and the number of eligible cases will increase from 276 to 411, a rise
of nearly 50 percent. Only the investor filing the claim can elect to
participate in the program and the firms cannot choose which cases are
eligible.
"With additional firms and more cases, the resulting information derived
from the pilot will permit a more robust analysis of the process of
using three public arbitrators," said Linda D. Fienberg, President,
FINRA Dispute Resolution. "The expansion also recognizes that the total
number of arbitration cases that have been filed in the forum has
increased since we launched the pilot last fall."
Each participating firm has agreed to commit a specific number of cases
to the pilot. Cases enter the pilot on a first-come, first-served basis
at the sole discretion of the claimant, who is typically a retail
brokerage customer. The program began on October 6, 2008, and will
conclude on October 5, 2010.
The three new firms contributing cases to the pilot program are: Chase
Investment Services, with 10 cases; Oppenheimer & Co, with 15 cases; and
Raymond James Financial Services/Raymond James & Associates, with 10
cases. Of the 11 firms already participating, five are increasing the
number of pilot cases from 40 to 60: Citigroup Global Markets, Merrill
Lynch, Morgan Stanley Smith Barney, UBS Financial Services and Wells
Fargo Advisors.
Other participating firms are Ameriprise Financial Services, with 18
cases; Charles Schwab, with 10 cases; Edward Jones, with 18 cases;
Fidelity Brokerage Services, with 10 cases; LPL Financial, with 10
cases; and TD Ameritrade with 10 cases.
The pilot program will be evaluated by a number of criteria, including
the percentage of investors who opt in and, of those, the percentage who
actually select an all-public panel. Currently, about half of the
investors in the pilot choose to have a non-public arbitrator on their
hearing panel.
FINRA also will compare the results of pilot and non-pilot cases,
including the percentage of cases that settle before award and how
quickly they settle, the length of hearings and the use of expert
witnesses. FINRA also is conducting participant surveys.
So far, investors have filed 474 eligible cases.
