Blog by Bill Singer Esq WEEK IN REVIEW

February 19, 2022
In today's featured public customer arbitration against Robinhood, the FINRA Arbitration Award hardly offers so much as a summary of the underlying issues. About all that we're told is that the dispute involves "unspecified securities." FINRA's say-nothing policy harmful in advancing the goals of public protection because it fails to alert the investing public about any developing problems. On top of that, the way Wall Street works, its customers are forced into mandatory arbitration against FINRA member firms and effectively denied redress for most disputes in court. Strike out the mandatory arbitration provision in any New Account Form and see if any FINRA member firm will open a new account for you; and, for good measure, complain to FINRA about this contract of adhesion and see how the regulator responds. It's one thing when an industry's culture of collaboration forces contracts of adhesion upon the public; however, it's quite another when the industry has been granted to luxury of self regulation but the self-regulatory-organization looks the other way.
Lately, FINRA sure as hell seems fascinated with Morgan Stanley's joint production agreements. Morgan Stanley uncovered some questionable conduct and FINRA was well within its rights to impose fines and suspension. Regardless, why is this stuff just popping up now when the underlying misconduct occurred a few years ago? A word to the wise, if you're altering production codes for whatever reason when you're entering trades, the practice is now on FINRA's radar.
Try as it might, wish as it might, Robinhood just can't seem to stay out of the press these days. In today's news, an unhappy Robinhood customer sued the brokerage firm in court despite the existence of a mandatory arbitration provision in the New Account Agreement. On top of that, with the ongoing COVID pandemic, it appeared that the customer was in no position to travel out of state, as would have been mandated by the arbitration provision.
Albert Einstein famously quipped that "Life is just like a game, First you have to learn rules of the game, And then play it better than anyone else." Those are sage words for Wall Street's regulators as they attempt to run their newfangled gamification ball into the end zone. Of course, there are still some quarterbacks who will come to the line of scrimmage, opt not to run the coach's play, and audible. Sometimes that's a gutsy call. Other times, not a smart play.