“Anyone with a sense of history can look at the declining, dismal results that [NASD and NYSE] arbitration has yielded to the investor over the past 20 years to see that the system is not a level playing field. NASD stats show the investor “win rate” has steadily declined. And when the customer does win something, the award is often only a small portion of the loss.”

That’s Ted Eppenstein’s well known view on why investors are now fed up with SRO arbitration, as expressed in an online debate with an industry representative entitled “Out-of-Court Fight, Two Decades After Mandatory Arbitration Took Effect for Investors’ Disputes, Debate over it Gains Renewed Momentum” [article by Jaime Levy Pessin, Wall Street Journal, August 6, 2007, see the Arbitration Alert on our Web site].

Ted has been outspoken about the plight of investors in SRO arbitration, most recently before the U.S. Congress House Judiciary Committee, Subcommittee on Commercial and Administrative Law on October 25, 2007 at hearings in support of H.R. 3010, the “Arbitration Fairness Act of 2007.”

Ted asked Congress to restore to investors the right to go to court to adjudicate their grievances, and he also argued for the formation of an independent arbitration forum outside the brokerage industry to settle such disputes, among other proposals. The Video Webcast of the Hearings is now available on the Subcommittee’s Web site.

The palpable level of investor distress over perceived aspects of unfairness in the SRO arbitration process gained added credence and hopefully a new sense of urgency for reform with the just-published independent Study on SRO arbitration by Professors Barbara Black and Jill I. Gross, “Perceptions of Fairness of Securities Arbitration: An Empirical Study.”

Commissioned by the Securities Industry Conference on Arbitration (SICA, on which Ted has been a member representing the interests of public investors for 10 years), the SICA Study has ignited a firestorm in the ongoing debate between the brokerage industry and investor advocates over fairness for investors in mandatory SRO arbitration.

Meanwhile, investors are impatiently waiting for the day when the current SRO arbitration process is made fair for all participants, and an alternative forum outside the industry is established.

Go to our new Press Release on the SICA Study.