What You're Up Against in a FINRA Arbitration Panel

Securities industry watchdog, FINRA (Financial Industry Regulatory Authority) recently released data on its effort to increase diversity among its arbitrators. The data shows that FINRA has made significant short-term improvements in recruiting a more diverse pool of potential arbitrators to sit on panels during securities arbitration hearings. However, as the data also shows, there is still a long way to go before FINRA panels more closely resemble the diversity of claimants in the forum.

Currently, even with its all-out effort to recruit more women and African-American panelists, FINRA has in 2016 only succeeded in bringing in 14% African-American and 33% women. This means that the typical arbitration panel will still likely be majority older, male, and white. 

Panelists Also Largely Come from the Securities Industry Itself

Beneath these demographics lie another issue confronting claimants attempting to wrest money back from the securities industry that failed them: an even greater majority of arbitrators are not only elderly white males, but they are also veterans of Big Finance themselves. Many of them have worked as compliance officers within major brokerages firm, and quite a few have also themselves been financial advisors. 

Sounds daunting, right? 

It is. And these skewed demographics of arbitration panel has a direct impact on the likelihood that you, the aggrieved investor, are successful in getting some of your hard-earned cash back from the industry. Think about it. If, like the majority of panelists, you had worked in the industry for decades, in the financial trenches, alongside other managers and brokers, how sympathetic do you really think you would be to the interests of investors? 

While the deck is certainly stacked in favor of the brokers and the broker-dealers, that should not deter you from seeking legal relief for your injuries. Most often, the strongest cases never make it to hearing.

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