January 29, 2013
This is to comment on File No. SR-FINRA-2013-003, proposing to revise the definition of "public arbitrator." I am an attorney in private practice who for over 20 years has represented parties on both sides in NASD and FINRA arbitrations. My securities arbitration practice is currently primarily on behalf of customers, although I also represent parties in intra-industry employment matters.
I support the proposal to add persons associated with mutual funds and hedge funds to those who are deemed industry arbitrators. The justification for this change would seem to be self-evident, and it is long overdue.
I also strongly support the proposal to extend the time during which a person would be excluded from the definition of public arbitrator due to an affiliation with securities industry participants, but the proposed 2 year period is far too short. Broad beliefs, attitudes and biases shaped over time about an industry in which one has been employed aren't likely to disappear or even significantly change in a brief two years. In my experience, FINRA panels consistently reflect a bias in favor of the securities industry, whether they recognize their own biases or not.
Individuals affected by the proposed amendments are not precluded from serving as arbitrators. There is little harm to them in continuing to be categorized as industry arbitrators much longer than 2 years. In my opinion, even 5 years is not enough to provide the individual with new life experiences sufficient to counterbalance the philosophical or emotional biases they are likely to have acquired through their personal participation in the industry which, in FINRA arbitrations, is typically being criticized. I would urge the SEC to require that persons with substantial experience working within the industry be categorized as industry arbitrators for 10 years after they cease their affiliation with the industry.
Thank you for the opportunity to comment on this proposal.