Wall Street Journal (October 7, 2014 1:58 pm) - The roster of arbitrators chosen to resolve disputes between investors and brokers lacks diversity, according to an organization of lawyers who represent investors in disputes with their brokers.

That lack of diversity can lead to one-sided rulings by arbitration panels that hear and decide on investors’ damage claims, said the Public Investors Arbitration Bar Association in a report issued Tuesday.

According to data cited in the report, based on a review of 5,375 disclosure reports arbitrators have to file with the Financial Industry Regulatory Authority Inc., the Wall Street self-regulator that runs the arbitration process, the average age of arbitrators is 67; about 40% are 70 or older and 17% are 80 or older. The lack of younger arbitrators makes the roster too homogeneous, Piaba said. Some 80% of arbitrators are men. “Women are underrepresented,” said Jason R. Doss, the president of Piaba and an attorney in Atlanta.

In the report, Piaba said a study of the roster of arbitrators showed they were also chosen from too narrow a group of professionals, such as lawyers, and had a “socioeconomic status that put them out of touch with the average investor.”

Piaba also said Finra isn’t doing enough to ensure it is recruiting impartial arbitrators. The lawyers’ group also said there was “a lack of transparency in how arbitrators are initially recruited by Finra.”

The rate of investors winning compensation or other awards has fallen to about 42% in 2013, from 60% in 1992, Piaba said. Mr. Doss said he believes the decline in the rate of investors winning compensation is tied to the lack of diversity in the arbitrator pool, though he conceded the issue needs to be studied further.

In July, Finra announced the formation of a task force to do a comprehensive review of the arbitration system. Piaba wants the Securities and Exchange Commission to look into the matter.

In a response to the Piaba report, Finra said the arbitration process was “a fair, efficient and cost-effective system.” Finra said, in a statement, it has “made substantial efforts to recruit and train arbitrators from diverse backgrounds and will continue to do so.”

“The reality is that win rates increase or decrease depending upon the controversy involved, market events and counsel,” Finra said.

“We think having educational and experience requirements for arbitrators is necessary,” Finra added. “The notion that individuals 70 and older are unable to and unfit to serve as effective arbitrators is insulting and borders on age discrimination.”

On its web site, Finra said arbitrators need to be neutral, qualified individuals with a minimum of five years of work experience inside or outside of the securities industry, for example as lawyers, educators, doctors, accountants, and securities professionals. Arbitrators must have at least two years of college-level education.

Customers’ contracts with brokers typically oblige them to submit any disputes to arbitration. Piaba has criticized that arrangement, arguing that customers should be able to sue in courts.

Write to Matthias Rieker at matthias.rieker@wsj.com