Subject: File No. SR-FINRA-2010-053
From: Kirk Reasonover
Affiliation: Attorney

December 3, 2010

I write to support the rule proposal in Release No. 34-63250 File No. SR-FINRA-2010-053 (Proposed Rule Change Relating to Amendments to the Panel Composition Rule, and Related Rules, of the Code of Arbitration Procedure for Customer Disputes).

Permitting customers to select an all public panel removes concerns about potential bias. A recent study suggests that requiring a non-public arbitrator for resolution of customer disputes contributes to the perception of bias, resulting in investor dissatisfaction with the arbitration process. J.I. Gross B. Black, When Perception Changes Reality: An Empirical Study of Investor's Views of the Fairness of Securities Arbitration, 2008 J. of Disp. Resol. 349 (2008).

In addition to the issue of perception, potential conflicts of interest can pose genuine threats to the impartiality of the arbitration process. As an attorney, I frequently represent investors in arbitrations and have represented numerous investors who have raised legitimate concerns about industry arbitrators. For example, concerns naturally arise that some arbitrators may have a concealed bias when they are in a role that routinely involves handling dispute resolution against public customers or where it appears that an arbitrator decided to serve on panels deciding customer disputes, shortly after their firm or business associates have, themselves, been involved in customer disputes.

Some cases involve proprietary products that are prevelent in the industry. Industry arbitrators whose firms market similar products naturally may have a disincentive from deciding cases in a manner that would tend to establish a high standard of care or heightened duties in such cases.

While there are certainly cases in which I have recommended the arbitration process, in part, due to the participation of knowledgeable industry arbitrators, I feel that the right to select an all public panel will enhance both investors' perception of fairness and fairness in fact.

I appreciate the opportunity to comment and welcome any questions that you may have.

Kirk Reasonover