I just came back from an arbitration where I was the industry panelist and there were two other public panelists.  The broker was pro so (represented himself).  The BD claimed $300k for the unpaid balance and the broker counterclaimed with breach of contract, defamation, and wrongful termination.  In short, the broker lost because he could not handle representing himself.  He sorely needed an attorney!!

Without breaching arbitrator ethics I can say that there were definite areas the broker could have addressed, in defense, that could have swayed the Panel to possibly significantly reducing the amount owed to almost zero.  As arbitrators we can ask questions but we cannot advocate for any party -- that means we can't act as a substitute attorney for either party.  In asking my questions for clarification the BD's attorney knew where I could have went with the line of questioning but the broker had no clue what to do with that information or to even continue the line of questioning.  Again, he needed an attorney.  The broker said that many clients could testify to support defamation but felt he only needed one -- bad assumption, especially when the testimony was not very telling.  Also the broker brought no physical evidence -- a clear message to the Panel that you're not serious or put no time and effort into defending yourself or to support your counterclaims.

The Panel will give some deference to a pro se party, primarily in procedural issues, but it won't do so in ruling on the merits.

Having an attorney or choosing to go pro se is obviously the choice of the broker.  If choosing the former, read part 1.  If the latter, put some time and effort into it, read the FINRA Code of Arbitration Procedure, and you may want to consider consulting with an attorney to at least get feedback in the type of claims or defenses you intend to make. 

good luck!