Employment Discrimination: How Registered Representatives Fare In Discrimination Disputes
HEHS-94-17
Published: Mar 30, 1994. Publicly Released: Apr 01, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed the securities industry's use of arbitration to settle employment discrimination disputes between securities firms and their registered representatives, focusing on: (1) cases filed for arbitration at the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD); (2) the nature and outcomes of discrimination cases in which NYSE and NASD arbitrators rendered a decision; (3) the demographic characteristics of NYSE and NASD arbitrators; (4) NYSE and NASD procedures for arbitrating employment disputes and selecting arbitrator pools and panels; and (5) the Securities and Exchange Commission's (SEC) oversight of the industry's arbitration programs.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Securities and Exchange Commission | SEC should direct self-regulatory organizations (SRO) to use existing information systems to track the numbers, types, and outcomes of discrimination cases that are filed at, and arbitrated by, their arbitration departments. |
Closed – Implemented
SEC agreed that SRO should be able to readily identify discrimination cases that are part of their arbitration caseloads, and directed SRO to use existing data to track discrimination cases that are filed at and arbitrated by their arbitration departments.
|
| United States Securities and Exchange Commission | SEC should direct SRO to establish written criteria and standards for excluding from SRO arbitrator pools industry arbitrators who have histories of disciplinary actions or regulatory infractions. |
Closed – Implemented
SEC agreed that SRO should exclude persons with significant disciplinary histories from their arbitration pools and directed that SRO establish written criteria and standards on this issue.
|
| United States Securities and Exchange Commission | SEC should direct SRO to require all arbitrators to disclose criminal convictions on their arbitrator profiles. |
Closed – Implemented
SEC issued directions to all SRO in October 1995 to implement this recommendation.
|
| United States Securities and Exchange Commission | SEC should direct SRO to assess and maintain information on arbitrators' expertise and use this information when selecting arbitrators to serve on panels, especially those deciding discrimination disputes. |
Closed – Implemented
In October 1995, SEC directed SRO to gather and maintain information on arbitrators' expertise and to use this information when selecting arbitrators to serve on panels for all types of cases.
|
| United States Securities and Exchange Commission | SEC should establish a formal inspection cycle for inspecting SRO arbitration programs. |
Closed – Implemented
In December 1995, SEC issued an inspection schedule of SRO that outlined plans to inspect some part of NASD annually, NYSE every second year, and other SRO every third year.
|
| United States Securities and Exchange Commission | SEC should follow up more vigorously on the implementation of its recommendations. |
Closed – Implemented
Beginning in FY 1996, SEC began to visit SRO at times between on-site inspection visits to determine whether its recommendations were implemented. In some cases, SEC also requested more frequent interim progress reports from SRO.
|
| United States Securities and Exchange Commission | SEC should, when selecting arbitration case files to review during inspections, include those involving discrimination complaints. |
Closed – Implemented
SEC issued guidance to its inspectors to specifically look for arbitrated discrimination cases when they select files to review during their inspections.
|
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Topics
Age discriminationArbitratorsBrokerage industryDispute settlementsDisputes clausesEmployment discriminationMonitoringSecurities regulationSelf-regulatory organizationsStock exchangesDisciplinary actions