This little story of the corruption that is a feature, not a bug, of the arbitration process has made it to the New York Times:

Five years ago, Sean Martin, a registered representative at Deutsche Bank Securities in New York, saw something troubling on his trading desk.

A few of his colleagues, he said, were letting preferred hedge fund clients listen in on confidential market commentary by the firm’s analysts before their views were made public. He alerted his superiors and was almost immediately given a negative review, a first in more than 10 years at the firm, he said. His bosses also removed him from the group he’d been working with and cut his compensation.

Mr. Martin, who continues to work at Deutsche Bank, said he believed that he was being punished for reporting misconduct and took the one avenue of redress that was open to him. In August 2012, he brought an arbitration case against the firm, contending retaliation and asking to recover his lost earnings. As is typical in the financial industry, his employment contract required that any dispute between him and his employer go through private arbitration, not the courts. Mr. Martin’s matter is being heard by three arbitrators associated with the Financial Industry Regulatory Authority, a self-regulatory organization that operates the largest dispute resolution forum in the securities industry.

But Mr. Martin’s experience with arbitration, both he and his lawyer say, has raised questions of fairness in the process. The three-member panel hearing his case has barred him from testifying about certain crucial aspects of what he saw at Deutsche Bank and disallowed the introduction of documents that bolster his claims. This led his lawyer to conclude that the panel was not interested in specifics of the behavior at the heart of his accusations — and to ask a state court to step in.

“When I filed this arbitration, I expected that Finra would resolve the dispute between Deutsche Bank and me in a fair way,” Mr. Martin, 41, said in a statement provided by his lawyer. “I was surprised and disappointed when the arbitrators refused to listen to important parts of what I wanted to say and rejected or redacted my exhibits. I can’t see how a dispute can be fairly resolved if one party is not even allowed to tell their side.”

………

“How can a panel of arbitrators for the regulator justify not hearing evidence of wrongdoing?” asked Robert Kraus, a partner at Kraus & Zuchlewski in New York, who represents Mr. Martin. “It is completely upside-down.”

………
But Mr. Kraus, worried that his client would not get a fair hearing, last week filed a motion in New York State Supreme Court asking to stay the arbitration hearings. Arguments are on the docket for Wednesday in Manhattan. If the judge grants Mr. Kraus’s request, the court will hear arguments on whether the arbitrators should be removed.

………

Mr. Kraus said he did not take the decision lightly to file his request with the court. He said he’s had success in other Finra arbitrations over the years but that this case was different.

“Unlike other hearings where you question a ruling here and there, these arbitrators repeatedly excluded evidence that lies at the heart of our case,” Mr. Kraus said. “From time to time, you get these panels that go off the rails, and then the question is how do you remedy that?”

This is not surprising.

The private arbitration system is inherently corrupt.

The continued employment of arbitrators is dependent upon satisfaction the firms, and not the employees of customers, so their rulings invariably favor the big corps, at the expense of due process for the little guys.