Therein lies an interesting legal debate that will be played out in many a securities arbitration case over the next several years.
Plaintiff attorneys filed 1, 463 cases for securities dealer association arbitration in January and February, up 23% in a year.
For years the securities industry has promoted and defended mandatory arbitration as being best for investors, as opposed to offering protection to the securities industry.
Right now, if you have a broker dispute, you have to submit to mandatory arbitration run by the securities industry.
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The secret tapings came to light amid arbitration cases in front of securities regulators.
If investors gain and the securities industry looses as a result of mandatory arbitration, then why is the industry so adamant about it?
However, many securities attorneys hoped the evidence would be admissible in arbitration or court as statements of fact.
It was a stunning revelation, one that is now the subject of an arbitration complaint before the National Association of Securities Dealers.
The options debacle helped drive a 24% increase last year in arbitration cases filed with the National Association of Securities Dealers to a record 6, 915.
The firms also now face hundreds of suits in which clients are seeking compensation for losses via arbitration in front of the National Association of Securities Dealers or New York Stock Exchange.
The National Association of Securities Dealers recently abandoned long- standing requirements that member companies use arbitration to resolve discrimination claims.
The brokerage industry is unique in that it has been permitted to self-regulate with limited SEC oversight, self-insure through the Securities Investor Protection Corporation, self-adjudicate through mandatory NASD Dispute Resolution arbitration, and even control, through the NASD Public Disclosure Program, the information the public receives about firms.
Deutsche Bank Securities, Inc. and Deutsche Bank AG, Third Party Respondents (FINRA Arbitration 09-00878, January 31, 2013).
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Respondents apparently requested that the FINRA Arbitration Panel issue subpoenas for two witnesses, who would allegedly testify that Respondents Securities America, Inc. and Talbott could not and would not have discovered anything further about the subject investment or the company offering the investment.
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