The Financial Industry Regulatory Authority has sent a proposal to the Securities and Exchange Commission that would tighten limits on who is eligible to serve as a “public arbitrator,” precluding industry veterans from acting as arbitrators in many disputes between investors and their brokerages, Reuters reports.
There are two classifications of FINRA arbitrators: public and non-public. According to FINRA, non-public arbitrators have a more extensive securities industry background. Public arbitrators, on the other hand, are not required to have any knowledge of the securities industry. The new plan would mean that arbitrators who have worked in the securities industry, even for just a short period, would no longer be eligible to serve as public arbitrators, Reuters reports.
