Accused of lax oversight in the wake of recent financial frauds, FINRA, the largest nongovernmental regulator of securities firms, is now facing an explosion of arbitration claims stemming from troubles in the capital markets. Moving some of those claims into the FINRA arbitration process are about a dozen law school securities arbitration clinics across the country, which, say their directors, are fielding numerous requests for help, often from elderly investors. "It's really gone crazy in the last month," said Professor Curtis Pew, director of the clinic at Hofstra University School of Law. "We literally are getting a call a day, and from all over the country. Our funding limits us to people who are linked to our area at the time the claim arose or who are here presently. I just wish I had more money." FINRA -- the Financial Industry Regulatory Authority -- oversees nearly 5,000 brokerage firms, 173,000 branch offices and 659,000 registered securities representatives.
It describes its chief role as protecting investors by maintaining the fairness of the U.S. capital markets. The agency recently reported that the number of new arbitration claims filed in January and February was 90 percent more than the number filed in the same period in 2008: 1,065 through February 2009, as compared to 561 through February 2008.
"We don't have official projections for 2009, but if the trend continues, we're probably looking at a high that will match what we saw in '03 and '04," said FINRA spokesman Brendan Intindola.
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