WASHINGTON -- FINRA has named a 13-person task force to evaluate and recommend ways to improve the self-regulator's often-criticized arbitration system for addressing investor complaints about their brokers.
The panel is comprised of seven public members and six industry representatives, pulling together advocates, attorneys, regulators and executives from groups such as Citigroup, Morgan Stanley Wealth Management and Securities America.
The task force will convene to consider potential improvements to make FINRA's arbitration process fairer and more transparent and efficient, delivering recommendations next year to FINRA's own National Arbitration and Mediation Committee (NAMC).
"Arbitration plays an essential role in establishing a fair, timely and cost-effective process for resolving disputes between investors and brokers," FINRA Chairman and CEO Richard Ketchum says in a statement on Thursday.
FINRA's arbitration process has been the subject of considerable controversy, with critics calling for more disclosures about the arbitrators who handle disputes between consumers and their advisors. In one high-profile case, FINRA dismissed an arbitrator who allegedly falsely claimed he was an attorney, but not before he had mediated more than 30 cases involving more than $15 million in claims.
One of the most vocal critics of FINRA's arbitration process, along with related issues of BrokerCheck disclosures and record expungements, has been the Public Investors Arbitration Bar Association, an investor advocacy group. PIABA President Jason Doss urges the new task force to make issues around disclosure the centerpiece of its inquiry.
"Improvement to the arbitrator disclosure process is of primary significance to us," Doss says. "I think that the integrity of the process begins and ends with the arbitrators."
Doss greets FINRA's announcement of the committee with a cautious optimism, praising the diverse composition of the panel for striking a balance between industry and the investor advocacy community.
"I am hopeful that the task force will be productive. There's a lot of very knowledgeable people that are on the task force," he says. "I think all interests are represented well on that task force."
Among the public members of the task force are Joseph Peiffer, an investor attorney with the firm Peiffer Rosca Abdullah Carr & Kane, who will replace Doss as president of PIABA later this year. Also serving as public members are Barbara Roper, director of investor protection with the Consumer Federation of America, and Joseph Borg, director of the Alabama Securities Commission, who also serves as a member of the North American Securities Administrators Association's board of directors.
Industry representatives include Kevin Miller, general counsel and chief compliance officer at Securities America, and Lisa Roth, CEO of Keystone Capital Corporation. Edward Turan, a managing director for Citigroup Global Markets, and Harry Walters, a managing director for Morgan Stanley Wealth Management, will also join the task force.
Doss, though he praises the talent and experience of the members of the new task force, questions the need for a separate body whose mission seems to overlap considerably with that of FINRA's NAMC, the advisory committee to which the panel will deliver its recommendations.
"I am concerned that the mission of the task force will add additional layers of just bureaucracy and its mission seems redundant to the mission and purpose of the NAMC committee," Doss says. "It's largely window dressing, I'm afraid, this new task force. But hope springs eternal."
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