NASAA Statement on FINRA Arbitration Pilot Program Expansion

WASHINGTON, D.C. October 5, 2009—The following is a statement by North American Securities Administrators Association (NASAA) President and Texas Securities Commissioner Denise Voigt Crawford regarding the expansion of the Financial Industry Regulatory Authority (FINRA) pilot program to allow certain investors making arbitration claims to choose a panel made up of three public arbitrators instead of the current system, which requires the inclusion of a mandatory industry representative on arbitration panels. NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.

“Regardless of the scope of FINRA’s pilot program on the composition of arbitration panels, a greater issue remains – the mandatory ‘take-it-or-leave it’ clause in brokerage contracts, which forces all investors to agree to mandatory, industry-run arbitration administered by FINRA, the securities industry self-regulatory organization.

“The only chance of recovery for most investors who fall victim to Wall Street wrongdoing is through a single securities arbitration forum controlled by the securities industry. NASAA believes that the securities arbitration system should be truly voluntary and that Congress should end mandatory securities arbitration.”

For more information:
Bob Webster, Director of Communications

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