The New York Times printed today an article by its controversial columnist, Gretchen Morgenson, entitled “Arbitration, Litigation, Aggravation.” The article reports on a FINRA arbitration brought by a beneficiary trust of Helen Cohen, an elderly widow who died in 2008, alleging that her broker at the State Employees Credit Union (SECU) improperly recommended that she purchase a risky real estate investment trust. The article focuses on a procedural maneuver that SECU utilized to circumvent arbitration on its counterclaim by suing in state court a third-party counterclaim-defendant (the employer of the Cohen trust’s trustee) which was not a FINRA member and thus not subject to FINRA arbitration. As a result, the Cohen trust had to spend additional resources on defending its interests in the litigation, erasing the time and cost-savings benefits of arbitration. Ms. Morgenson’s article laments that fact that the investor claimant (the Cohen trust) was not able to address all claims related to its customer dispute in FINRA arbitration. [To be fair, she does critique FINRA rules for not permitting a referral to the enforcement division for conduct of a FINRA member during the course of the arbitration while the case is pending. But FINRA has filed with the SEC a proposal to change that rule to permit mid-case referrals in extraordinary circumstances.]

The article struck me as odd, in light of the fact that Ms. Morgenson has been a critic of FINRA arbitration in the recent past. In her regular Sunday columns in the Sunday Business section of the New York Times, she periodically describes FINRA arbitration matters, decrying the fairness of the process for investors. (Just one example is here.) Has she come around? Is she now less critical of the fairness of FINRA arbitration because it has reformed its arbitrator selection process? Does she now think that Helen Cohen’s beneficiaries would be better off responding to any related counterclaims in FINRA arbitration rather than in court? If I have read the undertones correctly, perhaps we are seeing a new acceptance of FINRA arbitration as a fair forum.