U.S. investors will have the option of having their arbitration cases heard by an all-public panel.

The U.S. Financial Industry Regulatory Authority said Tuesday that the U.S. Securities and Exchange Commission has approved its proposed rule change to provide investors the option of having a completely public panel in FINRA arbitrations. Historically, panels have been comprised of two public arbitrators and one arbitrator with a connection to the securities industry.

FINRA sought the rule change last October after results of a 27-month pilot program showed that investors presented with this option chose the new method of arbitrator selection nearly 60% of the time. Investors regularly accepted a non-public arbitrator, but the ability to choose the circumstances improved their perception of the process, it said.

“This change will give investors an additional choice in selecting their arbitrators when they file claims,” said Richard Ketchum, FINRA chairman and CEO. “We believe that giving investors the ability to have an all-public panel will increase public confidence in the fairness of our dispute resolution process.”

Additionally, he said, “There was strong support from investor and consumer groups for giving arbitration customers the right to decide whether their panel should include a non-public member.”

The Investment Industry Regulatory Organization of Canada is also trying to improve its arbitration program. Last month, it raised the award limit to $500,000 from $100,000; and introduced the option, for investors, to eliminate the arbitrator’s discretion to award costs in their decisions.

IE