Summary: To work in the security industry, registered representatives--mainly stockbrokers--must agree to submit any employment controversy, including discrimination disputes, to arbitration panels comprised of neutral third parties. In recent years, the number of discrimination cases filed by registered representatives for arbitration at the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD) has remained low and relatively constant. Six discrimination cases were filed for arbitration with NYSE in 1990 and 14 in both 1991 and 1992. Between August 1990 and December 1992, NASD's New York Office and NYSE decided 18 discrimination cases. In 4 of the 10 cases involving financial awards, the monetary compensation was directly linked to discriminatory practices. Sex and age discrimination were cited most often in such cases. Some NYSE and NASD procedures for selecting arbiters need improvement. For example, NASD lacks written criteria for excluding potential arbiters with a history of disciplinary actions or regulatory infractions while working in the securities industry. In addition, NYSE and NASD differ in their requirements for arbiter disclosure of criminal convictions. The Securities and Exchange Commission's (SEC) oversight of arbitration programs focuses on customer-firm disputes rather than on employee-employer disputes. Because SEC does not review discrimination cases during its inspection of arbitration programs, it does not know the extent to which discrimination cases are filed and whether the industry has fairly and impartially resolved them. In addition, SEC has not established a formal inspection cycle--a set time for conducting inspections of securities' arbitration programs--to ensure that all programs are inspected regularly. SEC also does not know whether the securities industry corrects problems flagged by its inspections.
