From: Anthony Woska
The proposed NYSE Rule change appears to be form over substance.
It is simply not possible to promote just and equitable principles of trade, and to protect investors and the public interest with the cosmetic and insignificant change proposed.
For example, whether it is by random list selection or by a panel presented by the NYSE, the problem is now, and always has been, the quality of the arbitrators first, and the requirement that someone from the "industry" serve on a panel second.
Personally having been involved in hundreds of securities arbitration cases presented before NYSE arbitrators, it has been my personal experience that panels are generally unfamiliar with the 1934 Securities Act, the 1933 Securities Exchange Act and the applicable State Acts applicable to the case.
Arbitrators are typically unwilling to provide a basic understanding of the applicable law, unwilling to evaluate proof presented under claims and certainly unwilling to exercise any effort to consider "how" the investor was duped by the houses or the brokers. When a case starts, the panel is normally there to deny the claim, reduce the claim or otherwise come up with some type of judge Roy bean justice which is meted out against the investor.
I have never had a panel give an award of 100% of the actual damages in a single case.
I have never had a panel give an award which exceeded the actual damages.
Therefore, I have always had panels who ruled against investors and reduced or expelled their claim.
While it may be that I simply have always had bad cases or I have failed to present cases properly, I think you will find my experience the norm with most if not all practitioners in this area of the law.
It is the panel, not the selection method which fails to promote just and equitable principles of trade in keeping with 15 U.S.C. 78f(b)(5).
Until efforts are made to train panels that the sellers of securities are under very strict laws and required to disprove the fraud alleged, nothing will change. Perhaps the constitutionality of the system of arbitration is due for evaluation by a competent court of law. The individuals who bring claims and suffer disrespect at hearings know that the change of the selection method will change nothing.
Get rid of the industry panelist and train arbitrators in the law which protects investors so they can do their jobs properly.
"Genius only means an infinite capacity for taking pains." JANE HOPKINS (1836-1904) Work Amongst Working Men, 1870
A. Daniel Woska, Esquire