Brian A. Carlis, Shareholder and member of Stark & Stark’s Securities Arbitration Group, was featured in the article, “Few RIAs Accept Finra Invitation,” published in the Wall Street Journal on May 29, 2013.
The article discusses the meager RIA response to Financial Industry Regulatory Authority (“Finra”) expanding its arbitration forum to include registered investment advisors. Traditionally the Finra arbitration process was used solely by broker-dealers. This attempt to take over the role of overseer from the Securities and Exchange Commission (SEC) would mean lower arbitration fees for brokerages who would otherwise turn to the American Arbitration Association (“AAA”) to resolve issues with customers or employees.
Mr. Carlis, who represents RIAs in securities arbitration proceedings, explains that the higher AAA fees deter investors with small financial claims who are seeking a quick or cheap settlement. However, Finra is better equipped to handle securities disputes and ultimately clients would save money in the long run, even if it meant having to amend pre-dispute agreements in their contracts with clients to reflect this change in plan.
Mr. Carlis believes that many RIAs are reluctant to commit to Finra’s system until they see how others fare in the program. He said that as the first few cases are handled by Finra, he expects the number of RIAs who switch over to Finra to grow. Mr. Carlis “routinely discusses the pros and cons of both forums with his RIA clients, who might have to foot a hefty bill for an AAA hearing.”
