I believe that current regulation of securities arbitration does ensure that it is fair to investors. Part II of this Commentary explores the various sources of law, including the FAA, which could require fairness in securities arbitration. It revisits the first critical assumption of the McMahon Court, that the FAA's provisions for post-award judicial review protect investors from an unfair arbitration process. This Part demonstrates that, while the FAA does require “fundamental fairness” in arbitration, courts loosely construe that requirement and find most arbitration proceedings meet it easily. Part IIII of this Commentary explores SEC oversight of securities arbitration, particularly in the last ten years. This Part revisits the second critical assumption of the Court that this oversight ensures investors can substantively vindicate their federal securities law claims. It concludes that SEC oversight sufficiently regulates the fairness of securities arbitration. The McMahon paradigm thus appears to be working.
Jill I. Gross, McMahon Turns Twenty: The Regulation of Fairness in Securities Arbitration, 76 U. Cin. L. Rev. 493 (2008), http://digitalcommons.pace.edu/lawfaculty/451/.