Big Board Arbitration: It’s Broken, Let’s Fix It
While I am pleased that Daniel Beyda, the New York Stock Exchange’s top regulatory officer, took note of my criticisms of the Big Board’s extremely biased and unfair arbitration process (”Spitzer vs. the Little Guys,” editorial page, March 20), I’m shocked and disheartened by his Spitzeresque manipulation of the facts.
To start, Mr. Beyda notes that in 2005, customer claimants won or “settled” their disputes 73.35% of the time, “presumably, with the customer receiving monetary payment from the securities firm.”
By lumping settlements with claimant victories, Mr. Beyda cleverly conjures up a seemingly impressive statistic. Yes, most NYSE cases are indeed settled because attorneys representing individual investors know the process is so blatantly biased in favor of Wall Street there is virtually no chance of getting favorable decisions. Mr. Beyda conveniently doesn’t mention that the monetary payments being awarded are mere pennies on the dollar.
Mr. Beyda cites the introduction of a computerized, random list selection of arbitrators as one of the Big Board’s improvements. The NYSE’s shallow pool of arbitrators largely consists of “old, white men” who are generally unsympathetic to individual investors. It makes no difference whether the arbitrators are assigned by staff appointment or a computer.
Finally, Mr. Beyda’s comment that the NYSE welcomes “input from all users of our forum” cannot go unchallenged. I met with Daniel Beyda more than two years ago to discuss my concerns and he indicated that they would be addressed. Instead, the situation has deteriorated further, which is why the number of arbitration cases filed at the NYSE has plummeted more than 40% in the intervening period. Sadly, I suspect that Mr. Beyda will be defending the NYSE’s broken arbitration system right up until the day the NYSE achieves its goal of eliminating his department altogether.