Nine consumer and public interest groups have asked a Financial Industry Regulatory Authority task force to increase transparency in mandatory arbitration matters.

In a joint letter to the Finra Dispute Resolution Task Force sent Wednesday, the groups asked the task force to release information gathered in mandated arbitration disputes and information about the dispute process. The arbitration hearings are frequently the result of complaints filed by investors against advisors, brokers, advisory firms or broker-dealer firms.

The groups include Americans for Financial Reform, the Alliance for Justice, the Center for Justice and Democracy, Consumers Union, National Consumers League, Public Citizen, the National Association of Consumer Advocates, US PIRG, and the Public Investors Arbitration Bar Association (Piaba).

The groups are asking the task force to address the issues when it meets in Washington, D.C., Thursday.

In the letter, the groups ask for the release of information such as reports that Finra or the SEC collect on investor awareness of binding mandatory arbitration, the effectiveness of Finra’s arbitrator selection process, the prevalence of forced arbitration clauses in brokerage firm and investment advisory contracts, and feedback that Finra has collected from investors about arbitration.

The groups say, “Mandatory arbitration deprives investors doing business with brokerage firms and investment advisors of the right to a judge and jury. Investors do not receive open hearings and often do not receive fair ones. In addition, the process is unlikely to result in adequate awards against brokers to deter misconduct and compensate injured investors.”

Brokers sometimes use the arbitration process as a way to clean their records of investor complaints and the system “stunts development of critical legal policy,” the letter charges.

One of the groups, the Public Investors Arbitration Bar Association, or Piaba, which is made up of lawyers who represent investors, has said Finra arbitration proceedings foster secrecy and the system results in complaints being omitted from Finra BrokerCheck, which is supposed to enable investors to find complaints filed against brokers.

Finra has asked the task force to work together to suggest strategies to enhance the transparency, impartiality, and efficiency of FINRA’s securities dispute resolution forum for all participants, Finra said in a statement issued Wednesday. "We look forward to the recommendations that they put forth." 

The letter can be found at http://www.piaba.org.