Will This Change Mean Anything?
Evidently somebody has been reading Wall Street Versus America, which argued forcefully against the inherently unfair system of mandatory arbitration of brokerage disputes. Today, Dealbook reports the commencement of a two-year pilot program excluding industry representatives from arbitration panels.
This program is limited and chintsy-- a great deal more hype than substance. Only five firms -- admittedly big ones -- have agreed to participate, and only a minute number of investor cases will be involved.
The SEC should bypass FINRA and take the lead in applying this pilot program across the board. Unfortunately, that's not likely to happen under the current SEC leadership.
The injustice of mandatory arbitration is a far more significant investment issue than anything currently on the agenda of securities regulators, but has been obscured by the recent anti-shorting hysteria, eagerly adopted by SEC chairman Chris Cox to disguise his own failures in the mortgage crisis. Cox is shaping up to be the worst SEC chairman in recent history, worse than even the oafish corporate shill Harvey Pitt.
© 2008 Gary Weiss. All rights reserved.