Skip to content
Subscriber Only

Wall Street’s Captive Arbitrators Strike Again

July 9 (Bloomberg) -- A set piece of Voltaire’s 18th century masterpiece, “Candide,” is a scene in which the British, after losing a battle, execute one of their own admirals “pour encourager les autres.”

The analogy may be a bit heavy-handed, yet in many ways it fits what Finra -- the Financial Industry Regulatory Authority, Wall Street’s self-regulatory organization -- did to three arbitrators who, in May 2011, had the temerity to find in favor of a customer in a securities arbitration against Merrill Lynch, the nation’s largest brokerage and a unit of Bank of America Corp. After awarding the estate of the customer more than $520,000 -- a large amount by arbitration standards --Finra heard from unhappy Merrill executives and fired the arbitrators, two of whom had many years of experience.