August 17, 2017
We are the current director and former director, respectively, of Pace Law Schools Investor Rights Clinic (PIRC) in which law students, under faculty supervision, represent investors of modest means in their arbitrable securities disputes. We write to support FINRAs proposed rule change to revise the definition of a non-public arbitrator. The proposed rule change offers a simpler way to classify FINRA arbitrators, which will be easier for unsophisticated investors to understand. Additionally, the proposal, if enacted, would close a loophole (what FINRA terms the eligibility gap) that has precluded many competent arbitrators from being included on the non-public roster even though they did not fit the definition of a public arbitrator. Thus, the rule change, if approved, will provide greater choice of arbitrators to disputants who pursue claims in the FINRA arbitration forum. Enhanced choice translates to greater party control over the process, and, in turn, increases parties perceptions of the fairness of the forum.
In our view, the definition of a public arbitrator is also too complicated, and we urge FINRA to consider simplifying that definition in the near future.
Elissa Germaine, Supervising Attorney, Adjunct Professor of Law and Director, PIRC
Jill Gross, Professor of Law and Former Director, PIRC