The National Arbitration Forum Blog

Amidst a sea of articles about securities arbitration, Kevin Carroll and Seth E. Lipner, each in June Forbes articles (Arbitration Works, 6/17/2009 and Should Securities Arbitration Be Mandatory?, 6/29/2009 , respectively), defend arbitration for the resolution of securities industry disputes between investors and securities firms. See SEClaw.com for a look at Professor Lipner's article.

Mr. Carroll, in his article, makes several points in favor of pre-dispute arbitration agreements:

• Arbitration Process is Quicker. "Arbitration cases are resolved 40% faster than court cases, saving investors time and money."
• Good Option for Investors with Small Claims. "Specifically, 25% of all claims are for less than $10,000, a sum for which litigation is usually not cost effective."
• Investors Get a Fair Shake in Arbitration. "The percentage of claimants who recover--either by award or settlement--has held steady during the past several years, and in 2006 was 66%. In addition, between 1995 and 2004, investors' average inflation-adjusted recoveries in securities arbitration have followed a generally increasing trend, from approximately $25,000 in 1995 to over $50,000 in 2004."

Carroll is managing director and associate general counsel for the Securities Industry and Financial Markets Association. Many of his points were informed by a study that SIFMA conducted with its Legal and Compliance Division.