Nine public interest groups are prodding the Financial Industry Regulatory Authority’s arbitration task force, which met in Washington on Thursday, to ensure that the self-regulator improves the transparency of mandatory arbitration for investors by releasing a wide range of data not now publicly available.

“Mandatory arbitration deprives investors doing business with brokerage firms and investment advisors of the right to a judge and jury,” the groups, which included Americans for Financial Reform, the Alliance for Justice, the Center for Justice and Democracy, Consumers Union, National Consumers League, Public Citizen, the National Association of Consumer Advocates, US PIRG, and the Public Investors Arbitration Bar Association, told the task force in their Wednesday letter.  “Investors do not receive open hearings and often do not receive fair ones,” the group said.

The 13-member task force, appointed by FINRA last July, will issue a set of recommendations after a full year of review to the National Arbitration and Mediation Committee (NAMC), FINRA’s Standing Board Advisory Committee.

FINRA CEO Richard Ketchum has said the task force will not be permanent.

The groups requested in their letter that the task force “support” their request that FINRA release the following information: data in the form of studies and reports, that FINRA and/or the SEC have collected regarding investor awareness and understanding of predispute binding mandatory (or forced) arbitration; effectiveness of FINRA’s arbitrator selection process; prevalence of forced arbitration clauses in brokerage firm and investment advisory contracts; and other feedback that FINRA has collected from investors about any or all of these issues.

The letter notes that PIABA, which represents investors in disputes with the securities industry, went to court to compel the Securities and Exchange Commission to release certain arbitration data under the Freedom of Information Act, but the request was denied.

PIABA noted its series of studies examining structural and procedural traits of FINRA arbitration, which found that critical information is omitted from FINRA’s BrokerCheck system; that BrokerCheck also omits other critical information concerning prior conduct of stockbrokers and broker-dealer firms that investors need to make informed decisions; and that FINRA’s arbitrator selection process “is not only secretive but it results in an arbitration roster that lacks diversity.”

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