Home > Legal Library > Article




Join Matindale-Hubbell Connected


Compliance Matters: We Interrupt Our Regularly Scheduled Programming...




by:
Fred N. Knopf
Wilson Elser Moskowitz Edelman & Dicker LLP - White Plains Office

 
April 24, 2014

Previously published on April 15, 2014

While we strive to bring you the latest regulatory matters that we believe you will find important for compliance purposes, we would like to take a moment to bring you information that may be just as valuable.

Over the years, many observers have attempted to find verdict patterns among juries and courtrooms throughout the various state and federal courts. Whether a particular jurisdiction delivers favorable “plaintiffs’ awards” or “defense verdicts” is something routinely considered when conducting a dispute analysis. With more disputes arriving before a panel of arbitrators rather than their judicial counterparts, some have endeavored to identify similar patterns in arbitration hearings. Recent data regarding FINRA arbitration awards has come out, and some may find it surprising.

Data compiled over the past five years suggests that FINRA arbitration awards appear to enjoy tremendous variation. Hawaii may be good for more than catching sun and vacationing, at least for respondents in FINRA arbitrations. Hawaii was at the top of the list as one of the more favorable hearing locations for respondents, considering that 86 percent of the awards resulted in a zero-dollar amount for the claimants. Other respondent-friendly locations include Connecticut and Nevada, and even some unlikely venues such as Mississippi, Alabama and Georgia. The data revealed that these states resulted in the some of the lowest compensatory award percentages in the United States.

On the claimants’ side, states including Colorado, Kentucky and New Hampshire saw a high percentage of compensatory awards for those alleging grievances against their former representatives and broker-dealers. While the data did not include information such as stipulated or settled awards, or certain securities products, the findings remain surprising. The results are just as unexpected when locations within certain states are compared. For example, in Albany, NY, research found that when awarded, claimants received on average 90 percent of their requested compensatory damages. Compare this with the data in New York City, just 150 miles south of Albany. There, the data reveals that when panels issued an award in the claimants’ favor, claimants only received on average 18 percent of their compensatory damage requests.

While the research may have provided some answers regarding the who, where and when, a lot remains unknown regarding the what and the why. Simply put, what were the facts of the disputes in these findings and why do the awards in these locations tend to weigh in one direction rather than the other? While FINRA Rule 12213 states that hearings will generally be held close to the customer’s residence, for those seeking to move an arbitration hearing, the findings of this research may be a valuable tool.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

View More Library Documents By...

 
Author
 
Fred N. Knopf
 
Wilson Elser Moskowitz Edelman & Dicker LLP Overview