Is Securities Arbitration Fair to Investors?

15 Pages Posted: 17 Apr 2008

See all articles by Barbara Black

Barbara Black

University of Cincinnati - College of Law

Date Written: 2004

Abstract

Most disputes between customers and their brokerage firms are resolved through arbitration as a result of the Supreme Court's holding in Shearson/American Express, Inc. v. McMahon. McMahon was part of two larger trends of the Supreme Court: the Court's general pro-arbitration trend and its efforts to remove private securities fraud claims from federal court. Many investor advocates viewed McMahon as anti-investor, a view that continues to have support today.

This is an assessment of the current securities arbitration process from the perspective of an investor advocate. In my view, investors may fare better in arbitration than in litigation. Accordingly, the trend to transform securities arbitration into a more judicial process may not be advantageous to investors. There are additional reasons to be concerned about the securities arbitration structure created in response to McMahon in light of the proliferation of securities arbitration claims and the demands they place on the current system. In addition, this article addresses the special concerns of the small claims investors.

Keywords: Securities arbitration

JEL Classification: K22

Suggested Citation

Black, Barbara, Is Securities Arbitration Fair to Investors? (2004). Pace Law Review, Vol. 25, p. 1, 2004, U of Cincinnati Public Law Research Paper No. 08-18, Available at SSRN: https://ssrn.com/abstract=1120698

Barbara Black (Contact Author)

University of Cincinnati - College of Law ( email )

P.O. Box 210040
Cincinnati, OH 45221-0040
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
141
Abstract Views
1,754
Rank
369,138
PlumX Metrics