FINRA arbitration panels have historically been three person panels of screened, qualified licensed arbitrators. Drawn from diverse backgrounds in the securities industry, law and business, arbitrators are approved, licensed and listed as available. When a dispute is submitted to FINRA for resolution, the parties select the three-person panel from a list of approved FINRA arbitrators. Arbitrators are licensed either as "Public" or "Non-Public". A distinction with a major difference: go to FINRA's website for an explanation. A pilot program run by FINRA concluded recently found that investors, by a 60% factor, selected all "Public" arbitrators. The result prompted FINRA to propose a rule change allowing all "Public" arbitrator panels. Over 500 cases have been arbitrated under this pilot program. The purpose of the study is to determine the public perception of the fairness of panels. The two year study will conclude next year and may result in changes in panel members. The proposed rule allows the selection of an all "Public" arbitrator panel. The proposed rule change requires SEC approval, which is expected. The problem was created by FINRA (formerly NASD) by the designation of arbitrators as either a 'public' or 'industry' arbitrator. The ill-chosen designations suggest that the arbitrators are inclined to side with a private individual or side with the industry. This is not the case, but it is the perception: that is the reason for the rule change. If FINRA had it's socks on correctly they would drop the designations and just list arbitrators and their backgrounds and let the complainaint and respondent select.