Latest FINRA Securities Arbitration Statistics Released

Posted by on Sep 8, 2011 in arbitration, Stockbroker issues | Comments(0)

Statistics and percentages can be fun. (Cue groans here) Sometimes it can be interesting to dig deeper into the statistics and see what else they might mean. Each month, FINRA releases arbitration statistics for the month ending one month prior. So this month’s statistics analyze arbitrations through the end of July.

The report has the usual stuff — number of new arbitration cases filed, number of cases closed, etc. But dig a little deeper and there are some interesting figures. For instance, New arbitration case filings through July are down 12% over 2010. But they’re down 35% over 2009. This is likely a function of the reaction to the 2008 meltdown and the wave of cases that followed.

Here’s something else. If you total the new cases through July for 2009, 2010 and 2011, that equals 10,724. The number of cases closed during that same time period is 9,795, leaving an overhang of about 1,000 cases.

Another interesting statistic is the “How Arbitration Cases Close” analysis. An average of less than 20% of cases have gone to final hearing in the last 5 years. An average of 50% of the cases settle through direct communication between the parties (but the report does not specify how much the cases settled for). And, at most, 10% of cases settle through mediation. It is not clear if the “Direct Settlement” category includes cases settled through non-FINRA mediation but I suspect that the mediation category includes FINRA and non-FINRA mediation.

So what can we take away from this? First, if the numbers hold, a litigant is just more likely to settle a case than have it go to hearing, by a large margin. There is a less than one in five chance of going to hearing. And more than three-fourths of all cases never see a hearing.

What would be interesting is to pair these figures up with the “win” figures that are also tracked. The only problem with that, of course, is that the claimed damages may not be based in any sort of supportable logic.

That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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