Securities Arbitration Proceedings Are Fair

As an industry arbitrator for the National Assn. of Securities Dealers and an arbitrator for the American Arbitration Assn., I was drawn to a quote in the Personal Finance column, “Investors Lose in Recent Arbitration Rulings” (April 26): “As equitable as the NYSE and NYSD would like to be, they are broker-dealers and thus a self-regulatory agency. . . . You are at the mercy of their ability to choose fair arbitrators.”

It is a popular misconception that the regulatory bodies seek to protect broker-dealers. The three-member arbitration panel consists of only one industry person: Two of the panel members are public, with no industry affiliation.

If bias were present based upon affiliation with the industry, such a person is outnumbered 2 to 1. Also, it is generally acknowledged among arbitrators that the industry panelists are tougher on their peers than the public panel members.

Many of the arbitrators who serve on NASD panels also serve on the American Arbitration Assn.’s panels. Claimants will not get a more fair panel in the AAA forum.

To suggest that the regulatory panels are biased, or that a claimant would do better at the AAA, is false and misleading, as are most of the further conclusions of this article.

The writer appears to rely on statements made by a partner in a New York firm. The reader infers that this is a law firm, experienced in securities arbitration. I doubt that this person’s views are held by the majority of attorneys who practice before the arbitration panels, nor by the public arbitrators who would wince at the suggestion that they are prejudiced against claimants.

SONDRA TAGGART

Beverly Hills