Arbitrators could receive pay hike under Wall Street watchdog plan
Dec 6 (Reuters) - Arbitrators who hear legal disputes between investors and their brokerage firms could receive their first pay hike in 14 years under a proposal approved by Wall Street's industry-funded watchdog, according to a notice.
The Financial Industry Regulatory Authority (FINRA) on Thursday approved a plan for a 50 percent increase of fees it pays its securities arbitrators, the regulator said in a notice on its website. FINRA's board voted for the change on Thursday, according to the notice. The move is subject to approval from the U.S. Securities and Exchange Commission.
Fees that arbitrators receive to hear cases would increase from $200 to $300 for a half-day hearing and from $400 to $600 to a full day hearing. Arbitrator chairpersons would receive an extra $125 per day, instead of the current $75, FINRA said.
The raise would be the first for arbitrators since 1999, according to FINRA. It follows years of criticism by lawyers who represent both brokerages and investors that securities arbitrators do not receive adequate compensation.
FINRA runs the arbitration forum where investors and brokerages must resolve their legal disputes. Customers must sign documents when they open brokerage accounts that require them to resolve future legal disputes with firms through FINRA arbitration.
"FINRA arbitrators are woefully underpaid for the work they do," said Adam Gana, a New York-based lawyer who represents investors in securities arbitration cases. "Compared to fees in other forums, FINRA arbitrators are only making a pittance," Gana said.
The regulator plans to fund the pay increases by, among other measures, hiking fees to file arbitration claims of more than $500,000, FINRA said. The FINRA announcement did not include proposed amounts for those fee increases. A FINRA spokeswoman declined to comment.
Nonetheless, the possibility of higher filing fees did not concern some lawyers. "Anything FINRA can do to keep costs down for the investor side is good for investors as a whole, but a few hundred dollars won't make a material difference," said Lars Soreide, a lawyer in Fort Lauderdale, Florida who represents investors. "It won't dissuade legitimate litigation going forward," Soreide said. (Reporting by Suzanne Barlyn; Editing by Phil Berlowitz)
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