Finra Progresses in Diversifying Pool of Old, White, Male Arbitrators
White, elderly men continue to dominate the Financial Industry Regulatory Authority’s roster of arbitrators, but people of other race, age and gender demographics helped swell the ranks last year, according to a survey commissioned by the self-regulatory group.
Males represented 70% of the 7,730 Finra arbitrators available to resolve disputes among and between investors, advisors and brokerage firms as of the end of October 2018, according to the survey that was conducted by Alight Solutions. That’s down from 75% four years ago and from 72% a year earlier, based on responses from 39% of the arbitrator roster.
Only 60% of newly recruited arbitrators in 2018 were male, however, down from 72% who joined the roster four years ago when the survey was first commissioned.
Survey respondents who identified as Caucasian represented 83% of the Finra arbitration pool—down a notch from 84% in the 2017 survey and from 86% in 2015.
Arbitrators aged 70 or older comprised 38% of the roster, the largest age demographic, followed by 26% in the 61-69 cohort. (About 16% of survey participants did not respond to the age question.) Although the 70-and-older pool of arbitrators was up one percentage point from 2015, the survey found that 45% of new arbitrator recruits last year were 60 or younger.
“It is going to take a long time to change the total complexion of the arbitrator pool, but the Finra team has really done an amazing job in targeting minorities and thinking outside the box about recruiting,” said Marnie C. Lambert, a Columbus, Ohio, plaintiffs’ lawyer. “Many of our clients are working class, and it helps when they feel like they’re talking to people of the same gender, skin color or even, occasionally, occupation.”
(Finra, which competes with the American Arbitration Association and JAMS as a dispute resolution venue, now boasts that 55% of its arbitrator roster—4,240 people—are considered “public” and not affiliated with the securities industry.)
The industry-funded group, which has been making a concerted effort to bring people from more diverse age, gender and racial backgrounds into its ranks of dispute resolution candidates, said that the level of diversity among newly recruited candidates is on the rise.
“It’s vitally important that our pool of arbitrators reflect the varied backgrounds of the parties who use the Finra arbitration forums,” Richard W. Berry, head of the dispute resolution unit, said in a prepared statement.
Despite the high concentration of white men on Finra’s arbitration roster, 37% of new recruits to the pool last year were female.
The number of Hispanic/Latino recruits to the arbitrator pool soared to 8% last year from 4% in the 2017 survey, while African-Americans enlisting in 2018 remained flat at 15% of the new recruits. Overall, 7% of the arbitration roster as of October was African-American and 4% was Hispanic, according to the survey.
Five percent of new recruits identified as LGBT, more than double the total in 2017. The category represents 3% of the overall pool, according to the survey.