The new procedures will help the arbitration process, says Scott Shewan, president of the Public Investors Arbitration Bar Association, or Piaba, a Norman, Okla.-based group of lawyers who represent investors in securities arbitration. "Investors certainly want to have the highest-quality arbitrators possible," he said. "To the extent this would weed out problem arbitrators, I would think this is a good development."
Stuart Meissner, a New York-based lawyer who represents investors, calls the new background check procedures for grandfathered arbitrators "a start." He said he handled one case several years ago in which his own investigation revealed an arbitrator's criminal record for driving while intoxicated and assaulting his wife.
Investors and their lawyers, however, will continue to shoulder the burden of other inquiries, such as whether arbitrators are disclosing potential conflicts of interests, says Meissner.
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