February 6, 2013
I have two comments about this proposal: first, the proposal would continue to permit individuals who were previously registered with or employed by broker dealers for less than twenty years but did not "retire" from such firms to continue to be classified as "public" arbitrators even though such persons might continue to receive health insurance or other benefits from the broker dealers or might continue to hold assets in such firms' 401(k) or other benefit plans. Second, the proposal recognizes the fact that FINRA staff freely exercises discretion when interpreting and applying the arbitrator classification rules. This should not occur. A recent case made public by Bloomberg involving FINRA's removal of three Atlanta arbitrators from its pool demonstrates the problem of FINRA's staff exercising "discretion" in applying FINRA's rules. My personal belief is that the FINRA arbitration department should be disbanded and dissolved, and that disputes between customers and brokerage firms should be resolved either in court at the sole option of the customer, or in an arbitration conducted under the Federal Arbitration Act or any State Arbitration Act without the involvement of FINRA.