Neutrality and Bias

I did not get around to reading the Sunday New York Times until today. Sunday was Father's Day, of course, and I had a busy day that started with running 10K for Prostate Cancer Research. In Sunday's Times, there is an interesting article on the perception of bias among securities arbitration panels in the United States. Two things struck me about the article. One is that the percentage of investors that have made successful claims at arbitration has decreased over time. Second is that the arbitration panels are made up of persons who do not arbitrate full-time.

I find it very odd that the percentage of successful claims has decreased over time. While there may be many explanations as to why that is the case - the one suggested in the article is that the arbitration panels are predisposed against the interests of the claimants. Not only that, but that the panels have become more predisposed against claimants than had been the case. (which leads me to the second thing)

From what I gathered from the article the arbitration panels are made up of three persons - one from the securities industry and two representatives of the public - but the arbitrators are not full-time professional arbitrators - rather they are lawyers and/or business persons who have other business interests. I can not imagine a system other than the one I am involved in here in Ontario where every arbitrator is a full-time professional neutral. We do not have other business interests other than the interest in our own arbitration business. I would love to hear from my American colleagues how this system developed and whether the concerns raised in the Sunday Times are valid