The Changing Role of Arbitration in Securities Controversies

Arbitration, a quick, fair, and relatively inexpensive method of dispute resolution, has long been used in the securities industry. Its success can be attributed to civic-minded individuals who are willing to devote their energies to the impartial resolution of controversies. The United States Supreme Court has rendered landmark decisions favoring arbitration and held that pre-dispute contracts to arbitrate securities claims under the Exchange Act of 1934, the Racketeer Influenced and Corrupt Organizations Act (RICO), and the Securities Act of 1933 are enforceable. Since arbitration is the primary means of resolving disputes in the securities industry, the public perception of its fairness is of paramount importance. Arbitrators appointed to resolve securities controversies must continue to meet the challenge of maintaining fair and orderly arbitration proceedings.