February 3, 2015
So, you or one of your loved ones has suffered losses in a brokerage account and now faces difficulty meeting daily living expenses and/or health care expenses. Or perhaps retirement plans must now be delayed.
FINRA arbitration is the most commonly used procedure for holding the brokerage firm and/or the stockbroker accountable for negligence, misrepresentations or fraud which caused the loss. Arbitrations are resolved much more quickly than cases that are pursued in court and generally with much lower costs. Attorney fees are often done on a contingency basis.
When an investor opens an account with virtually any of the registered brokerage firms in the U.S. , the fine print on the new account form contains language waiving the right to go to state or federal court should the customer have a dispute over losses in the account. This provision, known as an ‘arbitration clause’, generally provides that any and all disputes shall be resolved by binding arbitration. While there are a number of arbitration forums , including the American Arbitration Association & JAMS, the vast majority of disputes involving customers of registered broker dealers are resolved through FINRA arbitration.
According to their website, The Financial Industry Regulatory Authority (FINRA) “operates the largest dispute resolution forum in the securities industry to assist in the resolution of monetary and business disputes between and among investors, brokerage firms and individual brokers.”
Arbitration vs. Mediation
The FINRA website provides the following Overview of Arbitration & Mediation:
“Arbitration and mediation are two distinct methods of resolving securities disputes between two or more parties. Disputes, claims or controversies arising out of business dealings with any FINRA brokerage firm can be resolved in arbitration or mediation.
Arbitration is a formal dispute resolution process in which the parties—customers, brokers, or brokerage firms making or responding to a claim—select a neutral, third party called an arbitrator, to listen to the arguments set forth by parties, study the testimonial and/or documentary evidence, and render a decision on the matter. By arbitrating your claim, you forego the opportunity to have the same matter decided by a court of law because an arbitration award is final and binding.
Mediation is an informal, voluntary and non-binding process. A mediator facilitates negotiations between disputing parties. The mediator’s role is to help the parties find a mutually acceptable solution to the dispute.”
In practice mediations seldom occur until the arbitration has been filed, and set for final hearing, in which case mediation is usually set 45 days or so prior to the final arbitration hearing.
Frequently Asked Questions About FINRA Arbitration
Below are summaries of FINRA’s position on some of the frequently asked questions about arbitration. See this for the full list of FAQs and FINRA’s complete explanation.
1-Are FINRA arbitration proceedings a matter of public record?
FINRA awards are public and are available on the Awards Online Database. Prior to the issuance of an award, information about an arbitration is not made public by FINRA.
2-Are arbitration statements of claim available to the public?
No, FINRA does not make statements of claim available to the public, however parties or their counsel are generally free to disclose details of their own proceeding as they see fit.
3-Does FINRA Dispute Resolution have any statistics on the percentage or number of cases where investors received awards?
Yes, see Dispute Resolution Statistics web page.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
Rex Securities Law
Florida-561 391 1900