Although brokerage firm contractual provisions and the rules of the Financial Industry Regulatory Authority (FINRA) make arbitration the default forum for resolving customer disputes in the securities industry, the arbitrator pools remain largely made up of Caucasian males over the age of 60. For that reason, and as with any dispute resolution forum, there is an unequivocal need to increase diversity in arbitration panels. Diversity helps to ensure parties will not feel disadvantaged and disenfranchised in litigating their disputes before FINRA. The Securities Industry and Financial Markets Association has stated that diversity “expands your firm’s knowledge and helps advance your offerings to clients.” Similarly, organizations such as the Public Investors Arbitration Bar Association have posited that having a diverse arbitration forum can result in improved decision-making compared with forums that have more homogeneous decision-making bodies.
Arbitration forums like FINRA and the American Arbitration Association (AAA) have already instituted initiatives to diversify. In recognizing its strides in increasing diversity in its arbitration rosters, FINRA has stated that “[w]hile we are encouraged by these short-term results and incremental progress made, we recognize this is a long-term effort. There is more progress to make and we remain fully committed toward achieving our diversity goals.” The AAA is “committed to the recruitment, retention and advancement of a diverse and inclusive Panel, Council and workforce, and seek[s] to advance diversity and inclusion in all aspects of the AAA’s work.” Through these efforts, steps have already been taken to ensure diversity of background in the arbitration forum.
Ensuring a diverse arbitration panel is crucial to improved decision-making through diversity of thought and approach. Different backgrounds bring different perspectives, which will ultimately lead to a more inclusive process. Corporate America has long since embraced the call for diversity in its ranks, and there are concrete steps the arbitration forums can take to follow suit and close the diversity gap in securities arbitration.