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Working Toward Fair Treatment for Retail Investors

9 Pages Posted: 27 Jan 2010  

Barbara Black

University of Cincinnati - College of Law

Date Written: February 1, 2010


Twenty years ago, in Shearson/American Express, Inc. v. McMahon, the Supreme Court held that brokerage firms could require their customers to arbitrate all their disputes in industry-sponsored fora - a decision that had great significance for the law of arbitration as well as securities regulation. In 1996, a blue-ribbon task force released its report, assessing the securities arbitration process at National Association of Securities Dealers, Inc. (NASD), the principal securities arbitration forum, and the report led to several symposia on the topic coinciding with the tenth anniversary of McMahon. Since then, arbitration scholars and practitioners have intensified the debate over the fairness of arbitration, both generally and specifically in the context of brokerage customers' disputes. In addition, in the last ten years, the stock market has undergone a boom and bust cycle that generated a record number of customers' claims filed at NASD; the securities industry has continued to market new investment products, strategies, and services for retail investors; and the aging population has increasingly become aware of the importance of investing for retirement, but has also become susceptible to deceptive promises offering freedom from financial worries. As a result of these developments, now is an opportune time for a re-examination of arbitration and investors' remedies.

Keywords: Retail Investors, Securities, Arbitration

JEL Classification: K22, K29

Suggested Citation

Black, Barbara, Working Toward Fair Treatment for Retail Investors (February 1, 2010). University of Cincinnati Law Review, Vol. 76, p. 375, 2008; U of Cincinnati Public Law Research Paper No. 09-41. Available at SSRN:

Barbara Black (Contact Author)

University of Cincinnati - College of Law ( email )

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

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