West Palm Beach Arbitration Lawyers
If you have a brokerage account with a major brokerage firm in the United States today, you have almost certainly agreed to resolve any dispute through mandatory arbitration. This means you cannot take your case to a courthouse to be heard by a jury. Instead, you must take your case to arbitration before the Financial Industry Regulatory Authority, also known as FINRA. (By the way, the brokerage firm you are suing is also a member of FINRA.)
For decades, lawyers who represent investors in these arbitration proceedings have railed against the inherent unfairness of the proceedings. Statistically, investors would be far better off taking their dispute to a regular court to be heard by a regular jury.
Wall Street counters that the arbitration system is fair. This has led many to ask: If the system is so fair, why must it be mandatory? In other words, if the system is so great, why not let investors themselves decide whether or not to use it?
The answer, of course, is that investors would rarely, if ever, choose to use it. Mandatory arbitration is a cost control mechanism put in place by Wall Street. The brokerage firms know they will pay less money to investors in arbitration than they would pay before a jury.
A recent article in the New York Times titled “Arbitration Everywhere, Stacking the Deck of Justice,” makes the point. The article, Jessica Silver-Greenberg and Robert Gebeloff, Arbitration Everywhere, Stacking the Deck of Justice, N.Y. Times, October 31, 2015, reports that mandatory arbitration is now sweeping the nation and has become the darling, not only of Wall Street, but the rest of corporate America as well.
Among other highlights of the article:
- Mandatory arbitration clauses are now buried within virtually every credit card, cell phone, cable, and Internet service application.
- Even Ashley Madison, the controversial site for adulterers, required clients to agree to mandatory arbitration!
- Even NFL cheerleaders agree to mandatory arbitration. When a group of them sued the Oakland Raiders they discovered their dispute would be resolved through mandatory arbitration, with Roger Goodell, the NFL Commissioner, deciding their case!
- Mandatory arbitration clauses often bar class action lawsuits, which can be the only way to address large-scale corporate frauds committed against large numbers of individual consumers for relatively small amounts of money.
- Some state judges have likened the class-action ban as a “get out of jail free card” for corporate America.
- Most Americans remain completely unaware of seismic shift that has taken place regarding their rights. By burying mandatory arbitration clauses in contracts, Corporate America has essentially hijacked the Seventh Amendment right to a jury trial.
- As one commentator noted: “Imagine the reaction if you took away people’s Second Amendment rights to own a gun.” Where is the reaction to the loss of our Seventh Amendment right to jury trial?
Unfortunately, none of this is news to the securities arbitration lawyers who have been battling mandatory investor arbitration for years. Statistically, about half of all investors who go to an arbitration hearing before FINRA get $0. The other half get about 50% of what they ask for.
It’s a great system for Wall Street. That’s why it’s mandatory.