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35 - FINRA Arbitration and Employment Disputes

from PART III - FASHIONING A REFORM AGENDA

Published online by Cambridge University Press:  05 May 2016

Ariel B. Wolder
Affiliation:
Hughes Hubbard & Reed LLP
Samuel Estreicher
Affiliation:
New York University School of Law
Joy Radice
Affiliation:
University of Tennessee School of Law
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Summary

A major concern for employment arbitration is that well-resourced repeat-player employers have an advantage over employees that they would not have in litigation. Ariel Roth analyzes over 400 arbitration cases, administered under the auspices of the Financial Industry Regulatory Authority (FINRA) during a 22-month period, to test whether employers fare better than employees, as claimants, respondents, repeat players, or facing an unrepresented party. The arbitration data show a higher employer win-rate over employees when the employer brings the claim and when the employer is a repeat player, regardless of whether the employee has an attorney. Unrepresented employees had a fifty-fifty chance of winning just like their represented counterparts. This study did not control for selection effects.

Arbitration is an important part of employment law and resolving employment disputes. Many organizations provide employers and employees the opportunity to settle their disputes through arbitration. In fact, increasingly employment contracts state that a claim must be arbitrated as opposed to litigated. This chapter analyzes claims brought to arbitration through the Financial Industry Regulatory Authority (FINRA), the nongovernmental, self-regulatory organization for brokers and dealers in the U.S. securities industry.

First, an employer needs to become a member of FINRA and in order to become a member they need to qualify for that status under the FINRA By Laws. A member as defined by FINRA “is a brokerage firm that has been admitted to membership in FINRA, whether or not the membership has been terminated or cancelled. A brokerage firm may be a partnership, corporation or other legal entity.” The member status extends to employees of the financial employer. According to the official terminology used by FINRA, employees may also be known as associated members.

This study is a supplement to the preexisting literature focusing on FINRA employment arbitration. It looks at arbitration cases over a 22-month period, from March 2010 to December 2012, and includes over 400 cases. One piece of important information added to the study is an analysis of claims brought pro se. Customer cases were excluded.

TYPES OF CASES

Based on the facts of the case and the claims brought, the cases were placed into seven categories. Those categories were retaliation (RD) claims, bonus and compensation (BC) claims, wrongful termination (WT) claims, discrimination (DS) claims, U-5 form (U-5) claims, general dispute (GD) claims, and promissory note (PN) claims.

Type
Chapter
Information
Beyond Elite Law
Access to Civil Justice in America
, pp. 518 - 522
Publisher: Cambridge University Press
Print publication year: 2016

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