November 30, 2010
I am an attorney practicing securities litigation in both courts and arbitration since 1991. I have arbitrated over 40 cases to an award.
In my experience, the industry arbitrator has not been a "neutral" in arbitration. Indeed, the industry arbitrator comes to the hearing with a background in sales of many of the products that are in dispute in individual cases (e.g. variable annuities et. al.).
In the 90's, the industry arbitrator stood for compliance with industry standards. Since the early 2000's the industry arbitrator appears to have "defended" industry standard violations and refused (by requiring compromises)to award proper (market) damages despite the portfolio's exposure to the market
Thus, the perception among most claimants is that the industry arbitrator actually defends inappropriate conduct rather than uphold proper standards. This situation requires the claimant to prove, to an extreme standard, violations and be "rewarded" with reduced damages which are not related to the risk taken.
The illimination of the industry arbitrator is the beginning of a process to make the forum fair/neutral to all participants.
Thank you for the opportunity to comment on this most important change to an unjust proceeding.