Securities Mediation: Dispute Resolution for the Individual Investor
Pace Law School
Ohio State Journal on Dispute Resolution, Vol. 21, No. 2, 2006
This article examines the fairness of mediation of customers' disputes with their securities brokers and their brokerage firms. After a brief description of the history of alternative dispute resolution of customer disputes in the securities industry, including the rise of mediation in the 1990s, I examine the impact on individual investors of the various layers of regulation of the mediation process, including the federal securities laws and state mediation laws. I also reject a recent federal court's holding that the Federal Arbitration Act applies to mediation as an unwarranted expansion of the FAA. I then analyze the various dimensions of fairness of this dispute resolution method, including substantive and procedural justice, party choice, and achievement of non-legal objectives, and conclude that securities mediation is a fair method of dispute resolution for the individual investor, and is a viable alternative to arbitration. In sum, this article will contribute to the growing body of literature that considers the impact on investors of the securities industry's promotion of a diversity of methods to resolve customer disputes.
Number of Pages in PDF File: 54
Keywords: securities, mediation, alternative dispute resolution, investor rights
JEL Classification: K10, K22
Date posted: November 2, 2007