Use of ADR to Resolve Disputes

This research paper discusses the use of alternative dispute resolution (ADR) techniques to resolve disputes, principally those between investors and retail stock brokerage firms, in the American securities industry. ADR initially developed slowly in the 20th century in common law jurisdictions as a cost effective alternative to litigation as the courts overcame their initial reluctance to accept an alternative dispute resolution forum and to recognize the enforceability of private pre-dispute arbitration agreements ("PDAAs"). Because of the congestion in the civil courts, ADR in a number of forms is very much in vogue in a variety of contexts. In the securities industry, ADR, primarily arbitration, has emerged since the mid to late 1980s as the principal vehicle for resolving disputes involving investors and brokerage firms. Today a number of issues face the parties involved in securities-related disputes, the self-regulating organizations ("SROs") under whose auspices such disputes are decided, the Securities and Exchange Commission and federal and state courts, in attempting to achieve a proper balance between the interests of the investor public and the industry and to improve the effectiveness and fairness of securities arbitration.

ADR takes many forms, including negotiation, mini-trials and other forms of early neutral evaluation, mediation, conventional arbitration and variants of arbitration,

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rts continued, however, to follow Wilko and to apply it to 34 Act claims. In Dean Witter, Reynolds v. Byrd, 105 S. Ct. 1238 (1985), the Court required the lower federal court to decide the state claim which was arbitrable, but refused to decide whether Wilko applied to 34 Act claims. In his concurring opinion, Justice Byron White said at 1244 that "Wilko's reasoning cannot be mechanically transplanted to claims arising under the Exchange Act," and drew a distinction between private rights of action which were created by statute (under Sec. 12(2) of the 33 Act and those which were created by judicial interpretation (such as those under Sec. 10(b) of the 34 Act). A severe split then developed among the federal circuit courts, the Second, Fifth, Ninth and Eleventh Circuits barring arbitration of 34 Act claims and the Eighth Circuit holding that such claims were arbitrable. Heinemann said with some logic that "there is no justification for the notion that once a court has recognized an implied right of action under the securities laws, that right should be entitled to less protection than an express cause of action." In 1987, the Court decided by a 5-4 vote in Shearson/ American Express, Inc. v. McMahon, 788 F.2d 94 (2d Cir. 198
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Some common words found in the essay are:
Arbitration Act, ADR ADR, Chrysler-Plymouth Inc, Bar Association, SECURITIES INDUSTRY, Exchange Act, Stock Exchange, Supreme Court, Arbitration SICA, Hutton Inc, punitive damages, arbitration act, supreme court, securities industry, brokerage firms, securities arbitration, 33 act, 2d cir, 34 act, stock exchange, award punitive damages, dean witter reynolds, york stock exchange, lehman hutton inc, 2d cir 1991,
Approximate Word count = 5637
Approximate Pages = 23 (250 words per page)

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