The shock of the crash may have worn off, but that doesn t mean investors have forgiven their brokers. On the contrary, complaints against brokers are up 85 percent this year. And while every single one of them will be heard eventually, investors expecting a jury of their peers will get a rude surprise: Often sitting in judgment of broker misbehavior is...another broker.

Welcome to securities arbitration, the first and last resort for investors who think their brokers sold them an inappropriate investment or misrepresented the risks in a fund. Under a system popularized more than two decades ago, claims of more than $100,000 against brokers are brought not before any court but before a three-person panel sponsored by the Financial Industry Regulatory Authority, the organization funded by the brokerage industry. Every panel includes a representative from the brokerage industry, drawn from a pool of brokers, industry lawyers, compliance officers, or others who have worked in the industry. If a third of the jurors on every medical malpractice case were doctors, no one would say patients were getting a fair shake, says Andrew Stoltmann, a securities lawyer in Chicago.

Not true, says FINRA, which maintains its arbitration process is consumer-friendly because it costs less and can be faster than a lawsuit. Plus, FINRA says, customers are awarded damages in almost half the cases. But a closer look suggests that s not the whole story: Even investors who win usually receive only 50 percent of their claim. And that percentage goes down as the claim or the brokerage gets bigger. Throw down with one of the three biggest brokers and the likely payout is about 21 percent of the claim, according to one study.

For their part, brokerage firms don t seem embarrassed by the lopsided results. Morgan Keegan, a Memphis firm facing arbitration claims related to safe bond funds that lost more than 78 percent last year, recently touted its arbitration record on its Web site: Of 113 cases against the firm that have been heard or resolved by FINRA, 95 have been dropped or dismissed. The firm says this shows there s no validity to most claims, but investor advocates don t buy the argument. After all, says Brian Smiley, president of the Public Investors Arbitration Bar Association, no car company would be proud of the fact that of 100 people who sued for brake failure, none of them won. As a consumer, isn t that a sign to shop elsewhere? he asks.

Consumer groups say it s also a sign that reform is in order. FINRA has launched a pilot program allowing investors to have their case heard by an entirely independent panel. But the biggest change may come from the White House. The Obama Administration has asked the SEC to take a closer look at the arbitration process.