FINRA is the Financial Industry Regulatory Authority. It touts itself as an independent regulator governing the conduct of all securities firms doing business in the U.S. Given the predatory conduct of the securities industry, it’s obvious that FINRA is falling far short of its mandate. The most insidious role of FINRA is running the mandatory arbitration system that adjudicates disputes between investors and their brokers. Most investors are unaware of the fact that, as a condition to opening a brokerage account, they are required to give up their constitutional right to a jury trial, and agree to submit all disputes to the FINRA-run arbitration system. So far, efforts to abolish this requirement—which is inherently unfair to investors—have been unavailing. The securities industry is a powerful lobby. The last thing they want is a forum where claims against its members will be judged fairly and impartially. More in US News here.
