According to the Financial Industry Regulatory Authority (FINRA), securities arbitration claims are on the rise in 2009. In fact, according to FINRA’s June Summary Arbitration Statistics, the self-regulatory organization anticipates that 56% more cases will be filed during the year, as compared to 2008 and that during the first six months of 2009, 82% more cases had been filed as during the same period in the previous year. During this same period, FINRA reports that fewer cases are going to mediation.
FINRA also reports that cases are being turned around in a shorter amount of time in 2009 as compared to 2008 and 2007. As of June 2009, the average overall turnaround time for claims filed in FINRA arbitration is 11.9 months (13.5 in 2007 and 13.2 in 2008). The turnaround time for cases that go to hearing is 14.7 months.
The most prevalent claims in securities arbitration claims are: (1) breach of fiduciary duty (4,432 claims); (2) Misrepresentation (3,530 claims); and (3) Negligence (3,404 claims). The most common securities at issue in arbitration claims are mutual funds (892 claims) and common stock (689 claims).
The results of securities arbitration claims have also been more favorable for investors/claimants than in 2008. However, Claimants still prevail in fewer than 50% of all arbitration claims decided by an arbitration panel. During the first six months of 2009, 138 of 298, or 46% of Claimant cases closed resulted in an award of damages to the investor. In addition, 50% of arbitration cases closed during the first six months of 2009 were settled by the parties (45% by direct settlement and 5% through mediation).