“The SEC issued a cease-and-desist order in 2006 against a number of broker-dealers to clear up claims of bid rigging and flush out new disclosures, so ‘investors will have a hard time saying they didn’t understand the mechanics.’”

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Securities Fraud Hotline Post, March 15, 2008.

Questionable business practices that have wreaked havoc in the credit markets has led to a series of probes in addition to the sub-prime investigation by New York state’s attorney general. As reported in the Wall Street Journal recently by Liz Rappaport, New York’s AG Andrew Cuomo’s latest target is, not surprisingly, the marketing of auction-rate securities. The AG has turned up the heat with subpoenas to Wall Street’s big players such as Merrill Lynch, Goldman Sachs, UBS, and Citigroup. It was also reported that Bryan Latagne, director of Massachusetts’ aggressive Securities Division, will spearhead a task force of state securities regulators investigating the auction-rate market debacle.*

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Theodore G. Eppenstein, March 3, 1987 at U.S. Supreme Court in Shearson v. McMahon.

Our last post here covered our subsequent statements to Congress over the twenty years since the McMahon case in the Supreme Court, and we have noted Ted’s proposals on behalf of investors as a member of the SICA committee to eliminate the requirement of an industry arbitrator in securities arbitrations. We are not alone in this effort. (more…)

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]. (more…)

• the end to mandatory securities arbitration,

• the formation of an alternative to self-regulatory organization (SRO) arbitration that’s fair for public investors and outside of the brokerage industry, and

• the end to the appointment of so-called “industry arbitrators” to hear customer cases.

Confirming what we and others have been hearing from investors for years, an independent Study just released today by its authors and by the Chair of the Securities Industry Conference on Arbitration (SICA, chaired by Professor Constantine Katsoris of Fordham University School of Law) demonstrates that most customers of the brokerage industry believe SRO securities arbitration is unfair. This important study, “Perceptions of Fairness of Securities Arbitration: An Empirical Study,” was commissioned by SICA and authored by Professor Jill I. Gross of Pace University School of Law and Professor Barbara Black of Cincinnati School of Law, with the assistance of Yasamin Miller, Director of Cornell University’s Survey Research Institute (SRI). Ted Eppenstein of our Firm, Eppenstein and Eppenstein, is a Public Member of SICA, the committee that initiated the Study. (more…)