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FINRA Defends Arbitrator Pool Amidst Criticism From New PIABA Study

On October 7, 2014, the Public Investors Arbitration Bar Association (“PIABA”) released a report that condemns FINRA for the “lack of diversity” and “transparency” found within its arbitrator pool. The PIABA report, based on an analysis of 5,375 FINRA arbitrators, identifies concerns involving: (1) arbitrators average age – according to the report, the average age of a FINRA arbitrator is 69 years old, with 40% of the pool aged 70 or older; (2) gender concentration – PIABA found that FINRA’s arbitrator pool is about 80% male; and (3) lack of adequate procedural safeguards to ensure appropriate disclosures are made to parties, and that neutral arbitrators are added to a selection pool. In addition, PIABA cited to a declining award rate for investors which it implied could be attributed to arbitrator fairness concerns. According to PIABA, the investor win rate was about 42% in 2013, compared to about 60% for similar claims in 1992.

Within hours of the report’s release, FINRA issued a statement defending itself against PIABA’s critiques. FINRA stated that it had been “working closely with PIABA since 1999 in an effort to recruit the best arbitrators possible” and “[t]he suggestion that FINRA has not been partnering with PIABA in recruitment of potential arbitrators is absurd.” FINRA further noted that it formed an Arbitrator Task Force, in July 2014, to consider possible enhancements to the arbitration forum that includes “strong” PIABA representation. FINRA also disputed the relevance of PIABA’s win rate statistics, stating, “[t]he reality is that win rates increase or decrease depending upon the controversy involved, market events and counsel.”

PIABA’s press release can be found here:,%202014%29.pdf

FINRA’s Statement on PIABA’s Arbitrator Report can be found here: