July 27, 2010
It is my understanding that the Act gives the SEC the power to change the rules regarding customer agreements and submission of all disputes to arbitration through FINRA. If this change is made, my feelings are that it is imperative that the new rule still give the client the opportunity to bring his dispute using the FINRA arbitration forum. My firm represents clients in these disputes against major broker dealers, and we feel that the FINRA arbitration forum is extremely fair, expeditious, and levels the playing field. Although a number of Claimant's attorneys may think that they would rather be using the court system for these disputes, they are dead wrong. The majority of our cases settle prior to an arbitration hearing, however, we do try about 10-12 cases a year, and have done very well in this litigation.
One change that does need to be made, is that FINRA should be the forum required for cases brought against Registered Investment Advisors. Usually, clients are out of luck if they want to bring an action agains these RIA firms. RIAs are not required to arbitrate through FINRA, even though they fill out a FINRA fom to become a RIA. It is difficult to pursue these cases in the Jams OR AAA forum, and this can only be done if it notes so in the customer agreement.
So, in conclusion, instead of seeking to curb or limit FINRA arbitrations, we fell that the SEC should increase the availability of these hearings for the client.