What is the current role of the law in securities arbitration? Given the difficulties investors would encounter in pleading and proving their claims in court, they may well be better off in a system where less attention is paid to the law and more to the equities of the actual dispute before the arbitration panel. While this is not a system where accountability and predictability of results can be achieved, investors may, in fact, fare better than they might expect. It follows then that if equitable considerations enhance rather than subtract from investors' chances of recovery, then investors need not worry about the consequences of the arbitrators' failure to apply the law.
Barbara Black & Jill I. Gross, Making It Up As They Go Along: The Role of Law in Securities Arbitration, 23 Cardozo L. Rev. 991 (2002), available at http://digitalcommons.pace.edu/lawfaculty/15/.