December 3, 2010
I strongly support FINRA's rule change making the industry arbitrator pilot program permanent. As an attorney who primarily represents customers in FINRA arbitration, I can attest to the fact that clients are often shocked at the fact that the rules currently require an industry affiliated person to be a part of each panel. They rightfully believe that this person will be harder to convince of wrongdoing, may have engaged is the same or similar conduct as the broker and firm at issue in their case and may be concerned that giving a significant award, especially against a large national broker/dealer, will limit their future employment opportunities. Such a direct interest in the outcome of arbitrations cannot reasonably be justified, even with the false argument that the "expertise" the industry person brings to the panel can be "helpful" to the other arbitrators.
The fact that an industry arbitrator is required on each panel has been a major contributor to the viewpoint by most outsiders that the FINRA arbitration forum is not fair and will lead to an unjust result. This new rule, which would allow a claimant to include an industry arbitrator when it makes sense, but not require it, is necessary (although not the only necessary change) to help reverse the perception that FINRA arbitration is biased in favor of the brokerage industry.