NASAA: Reform arbitration or add court option
The securities arbitraiton system should be refored or else investors should be given the option of taking their disputes to court, according to a group that represents state securities regulators.
“We think it needs to be reformed,” said Joseph Borg, director of the Alabama Securities Commission in Montgomery and president of the North American Securities Administrators Association Inc. “Absent that we may have to consider making it optional.”
As part of its 2007 legislative agenda, Washington-based NASAA is calling for the new Democratic Congress to review the arbitration system.
But it isn’t clear whether the congressional committees that oversee financial services will take up arbitration soon.
“Financial services is a big world,” and House Financial Services Committee Chairman Barney Frank, D-Mass., hasn’t added the subject to his agenda so far, said committee spokesman Steve Adamske.
Among issues that need to be reviewed, Mr. Borg said:
• How arbitration panels are selected.
• Whether arbitrators are properly trained.
• Whether explanations of awards are sufficient.
• Whether the system is cost efficient.