Press Releases

Release Date: October 24, 2007
Contact:
Travis Larson, (202) 216-2057, tlarson@sifma.org

New Study: Securities Arbitration Is Fair; Faster, Less Expensive than Litigation

Smaller Investors Get Protection Litigation Is Unlikely to Provide

Washington, D.C., October 24, 2007 – The Securities Industry and Financial Markets Association (SIFMA) in conjunction with its Compliance and Legal Division today released a white paper that demonstrates the benefits to investors, and the sound public policy that underpins, agreements to arbitrate securities disputes.  As of 2006, there were 111,564,826 brokerage accounts in the U.S., the vast majority of which include agreements to arbitrate disputes.

“For over 30 years, securities arbitration has provided investors with a fair and unbiased forum where disputes are resolved more quickly and economically than in the courts,” said Marc Lackritz, SIFMA president and CEO.  “Securities arbitration is unique in that it is closely regulated by multiple independent regulators, including the Securities and Exchange Commission, and is subject to extensive public oversight and participation.  The evidence clearly demonstrates that this system benefits investors who can arbitrate securities claims that they could not afford to litigate or that would be subject to dismissal in court. This study shows securities arbitration to be fair, and also faster, and less expensive than litigation in court.”

In addition to analyzing the arbitration system, the study reveals:

·        Arbitration cases are resolved 40% faster than court cases, saving investors time and money

·        Investors’ claims are more likely to be heard on the merits: 20% of arbitration claims are decided by arbitrators vs. only 1.5% of civil claims in court that are heard by a decision-maker  (judge or jury)

·        25% of all claims are for less than $10,000, a sum for which litigation is usually not cost effective

·        The last two years of data confirm that investors fare as well with an industry arbitrator on their panel as without

 

This arbitration white paper is the most thorough and current examination of the tightly regulated securities arbitration forum.  The paper describes the regulatory oversight and procedural protections that make securities arbitration unique and explains the results of numerous independent studies.  The paper also provides the most up-to-date statistical data which demonstrate the compelling benefits of pre-dispute agreements to arbitrate. 

The full content of the white paper can be found at the following link: 

http://www.sifma.org/regulatory/pdf/arbitration-white-paper.pdf

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The Securities Industry and Financial Markets Association brings together the shared interests of more than 650 securities firms, banks and asset managers. SIFMA's mission is to promote policies and practices that work to expand and perfect markets, foster the development of new products and services and create efficiencies for member firms, while preserving and enhancing the public's trust and confidence in the markets and the industry. SIFMA works to represent its members’ interests locally and globally. It has offices in New York, Washington D.C., and London and its associated firm, the Asia Securities Industry and Financial Markets Association, is based in Hong Kong.