February 7, 2013
I support the rule change to amend the definition of "public arbitrator" under Rule 12100(u) of the Code of Arbitration Procedure to exclude persons affiliated with hedge funds and mutual funds. Such individuals are properly designated as "non-public" or industry arbitrators, even though they are not licensed by FINRA itself.
However, I believe that the proposed two year look-back period is too short. Instead, hedge fund and mutual fund professionals should be subject to the same exclusion period applicable to FINRA licensed securities professionals, which is currently 5 years. In addition, former hedge fund and mutual fund professionals should be permanently excluded from the public pool if they have "retired from, or spent a substantial part of a career engaging in" mutual and/or hedge fund activities. See FINRA Code of Arbitration Procedure Rule 12100(p)(1) (2).
Such changes will be beneficial to the investing public because such the securities industry affiliation of such potential arbitrators disqualifies them for inclusion in the public arbitrator pool.