54 Pages Posted: 2 Nov 2007
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.
Keywords: securities, mediation, alternative dispute resolution, investor rights
JEL Classification: K10, K22
Suggested Citation: Suggested Citation
Gross, Jill, Securities Mediation: Dispute Resolution for the Individual Investor. Ohio State Journal on Dispute Resolution, Vol. 21, No. 2, 2006. Available at SSRN: https://ssrn.com/abstract=1026355