The Selection of Claims in Securities Arbitration for Settlement: A Text-Based Analysis

59 Pages Posted: 30 Dec 2021

See all articles by Stephanie Denis

Stephanie Denis

affiliation not provided to SSRN

Matthew Kozora

Financial Industry Regulatory Authority (FINRA)

Minwen Li

FINRA

Jonathan S. Sokobin

FINRA

Date Written: December 28, 2021

Abstract

This paper develops text-based measures of case strength and similarity using Statements of Claims filed in securities arbitration concerning investments in Puerto Rico municipal bonds to predict arbitration outcomes. We find that stronger customer claims and claims more similar to previous claims are more likely to settle than result in an award. These claims are also associated with higher total customer payout, including both settlements and awards. Our findings offer unique insights into the role of settlements as an alternative method of dispute resolution, and the selection bias associated with claims which result in an award.

Keywords: Securities Arbitration, Settlement, Statement of Claim, Textual Analysis

JEL Classification: D14, D18, G18, G24, G28, G3, K41

Suggested Citation

Denis, Stephanie and Kozora, Matthew and Li, Minwen and Sokobin, Jonathan, The Selection of Claims in Securities Arbitration for Settlement: A Text-Based Analysis (December 28, 2021). Available at SSRN: https://ssrn.com/abstract=3995556 or http://dx.doi.org/10.2139/ssrn.3995556

Stephanie Denis

affiliation not provided to SSRN

No Address Available

Matthew Kozora

Financial Industry Regulatory Authority (FINRA) ( email )

Washington, DC
United States

Minwen Li

FINRA ( email )

1735 K Street
Washington, DC 200006
United States

Jonathan Sokobin (Contact Author)

FINRA ( email )

1735 K Street NW
Washington, DC 20006-1506
United States
(202) 728-8248 (Phone)
(301) 527-4809 (Fax)

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