Subject: File No. DF Title IX - Whistleblower
From: Barry D Estell, Esq.
Affiliation: Attorney Representing Customers in FINRA Arbitration

July 30, 2010

Only 40% of customers receive any award and those that do receive, on average, only about 30% of damages. That number includes many uncollectable large awards against insolvent Finra firms and the award is often substantially consumed by the the high forum fees.

If the process was actually fair, fast, and inexpensive it would not have to be forced on customers with contracts of adhesion. If the customer were given a choice, the Commission would see the real vote as investors rejected the forum and Finra would have to actually try to make the process appear neutral. At present, Finra staff are employees of the brokerage firms and have no incentive to give the customers a fair hearing.

Forced arbitration has, as a practical matter, eliminated state securities acts because arbitrators are trained to ignore them. In the two states where I practice, there has never been a statutory award under the Kansas or Missouri Securities Act in the 20 years of mandatory arbitration. A securities industry trade association should not be allowed to void state investor protection laws for the financial benefit of its members.