The dictionary defines a  Kangaroo Court  as “a self-appointed or mob-operated tribunal that disregards or parodies existing principles of law or human rights, especially one in a frontier area or among criminals in prison.” Alternatively, a Kangaroo Court is “any crudely or irregularly operated court, especially one so controlled as to render a fair trial impossible.” As disclosed in a recent Bloomberg article, forced arbitration is Corporate America’s Kangaroo Court.

Consider the Financial Industry Regulatory Authority (FINRA). FINRA is a private organization whose primary source of revenue comes from the very Wall Street companies that are its members and that FINRA is entrusted with regulating.  Part of this “regulatory” authority includes overseeing a private dispute resolution process which requires any consumer with a brokerage account to agree, in advance,  that any financial claim asserted against a member broker will be decided not by a jury of one’s peers, but in an arbitration process overseen by FINRA. The results are predictable. But when they are not, the masters of the Kangaroo Court will be sure to set things right. 

This is exactly what happened when three FINRA arbitrators had the audacity to rule in favor of a Merrill Lynch customer who successfully argued that his broker lost more than $500,000 of his money. Merrill was not happy, and its lawyer let the FINRA panel of three arbitrators know it in no uncertain terms.  Within months of the decision against Merrill, each of the three arbitrators received a “black-spot” letter from FINRA, informing each that they had been terminated “as an active member of Finra’s dispute resolution roster of arbitrators.” 

The message is clear. Paid arbitrators that desire repeat business in FINRA proceedings supported by FINRA members had best be mindful of who pays the piper. Their job is not to follow the law, but to parody it.  As expressed by one of the dismissed arbitrators himself, “it’s unbelievable that they would take such an experienced panel and get rid of it.  To me, this undermines the credibility of the entire FINRA process – I didn’t say kangaroo court – but when you have three well-credentialed people doing their job, and there were no meritorious grounds for an appeal, and we get handed the ‘black spot’  . . . it makes for a pretty cheap novel.” 

We will say it. Forced arbitration is nothing but a self-appointed, crudely operated court that is so controlled by its corporate masters that a fair trial is impossible. Forced arbitration is the definition of a kangaroo court.