Congress created the Office of the Investor Advocate of the Securities and Exchange Commission in the Dodd-Frank Act in 2010 to, among other things, “(A) assist retail investors in resolving significant problems such investors may have with the Commission or with self-regulatory organizations (SROs); (B) identify areas in which investors would benefit from changes in the regulations of
the Commission or the rules of SROs…” Exchange Act § 4g(4). In turn, the Investor Advocate appointed an Ombudsman to “act as a liaison between the Commission and any retail investor in resolving problems that retail investors may have with the Commission
or with SROs.” Exchange Act § 4(g)(8)(A). Both the Investor Advocate and the Ombudsman are required to submit reports to Congress on their activities. This week, the Office of the Investor Advocate submitted its Report on Objectives for fiscal year 2018, which included the Ombudsman’s Report.
In her Report, the Ombudsman addresses several items of interest to the dispute resolution community. First, the Report (p. 23) describes how her office is monitoring whether recommendations from the FINRA Dispute Resolution Task Force Report have been implemented in ways that help retail investors. She expresses concerns about elements of customer arbitrations at FINRA, offering another voice to the ongoing efforts to improve the fairness of securities arbitration.
Second, in recommending that the FINRA Investor Education Foundation support ongoing operations of law school securities clinics, the Ombudsman details (p. 24) the value that these clinics offer retail investors:
The Ombudsman is concerned about the challenges faced by investors—especially pro se investors who face sophisticated opposing counsel representing broker-dealer firms in a forum
that has become increasingly complex—when the life savings of the investor are at stake and there is little ground for appeal. Investor rights clinics fill a critical void by supplying information and advocacy services to vulnerable retail investors in need. Competent representation of retail investors in FINRA’s dispute resolution forum is a critically important step in helping vulnerable retail investors protect their rights. These clinics and the investors they serve merit the Foundation’s support.
Third, the Ombudsman describes (p. 24) her Office’s new outreach program to the clinics, including visits with students at Pace Law’s Investor Rights Clinic and the University of Miami School of Law Investor Rights Clinic. The Report praises the investor education work of the students, and emphasizes the importance of providing investors with representation in arbitration. The SEC’s spotlight on these law school securities clinics celebrates the tremendous work that law students do in representing investors in their disputes with their brokerage firms!
