The U.S. Securities and Exchange Commission (SEC) has recently issued a report on investment advisor arbitration, igniting a conversation about potential changes in the world of arbitration involving investor claims. The overarching implication is: a paradigm shift might be on the horizon.
According to the original publication in American Bar Association, the claim process varies greatly depending whether the professional involved is associated with a Financial Industry Regulatory Authority (FINRA) member firm (like a broker or financial advisor at a broker-dealer), or is an SEC-registered investment advisor.
The discrepancy arises from the fact that FINRA has well-established, comprehensive rules and a procedural framework for arbitrating such claims, whereas the SEC-registered investment advisors, do not fall under the purview of the same level of organizational control and structure.
The report’s findings, initiated by the Bressler, Amery & Ross, P.C., fuels question about whether this might usher in a new era of uniformity within the arbitration process for both professionals as referenced above. It could potentially restructure the landscape of investor claim arbitration altogether.
While questions still remain, the SEC’s report draws attention to the current status of arbitrating investor claims and stimulates the discussion for a possible revision in the legal processes tied to these actions. This emerging issue warrants the attention of legal professionals around the globe, particularly those within the financial services industry.