At a press conference today and accompanying this press release, the Public Investors Arbitration Bar Association announced it had conducted a study of FINRA’s arbitrator roster.  It concluded that the roster lacks diversity (in particular, it is 80% male), and almost half of the pool is 70 years old or older.

The study also concluded that the forum failed to detect arbitrators’ potential biases and to communicate them to disputants.  More specifically, PIABA stated:

FINRA’s arbitrator disclosure process fails to ensure that it provides updated and accurate background information and information related to potential conflicts of interest and bias to parties. In many cases, arbitrators are unable to indicate when they last updated their disclosure documentation and do not appear to be urged by FINRA to do so on a regular basis. In addition, FINRA fails to have adequate and verifiable procedural safeguards in place to ensure that impartial and neutral arbitrators are added to the arbitrator pool.

PIABA concludes that these two defects in its arbitrator recruitment process results in an unfair forum for investors to resolve their disputes with their broker-dealers. The ball is now in FINRA’s court to refute PIABA’s allegations and reassure the investing public that its arbitrator roster is diverse and that it adequately gathers arbitrator background information and other disclosures and then methodically communicates those disclosures to disputants.