What Disputes Are Eligible For Arbitration?

In considering whether to initiate arbitration, it is important to keep in mind that, generally, a public customer has a right to require a broker/dealer to arbitrate only disputes relating to or arising out of the broker/dealer.

When deciding where to file your claim, you should determine which self-regulatory organization (SRO) supervises the markets where the transaction occurred or the securities are listed. The Uniform Code provides that an SRO may, with the consent of the refer a case to the appropriate forum where the transaction occurred or the securities are listed.  This really only comes into play where there are options transactions. Those cases may be filed elsewhere.

An additional factor to be noted is that a controversy is not eligible for submission to arbitration if six or more years have elapsed from the date of the event giving rise to the dispute. The arbitrators also may dismiss a claim barred by shorter applicable state or federal statutes of limitations. If there is a question about the statute of limitations, you should consult an attorney.

Even after a customer has signed the agreement to arbitrate, the customer may request either the sponsoring organization or the arbitrators to permit that customer to proceed with his or her claim in court. The customer should be aware, however, that in most cases the sponsoring organization and the arbitrators will retain and proceed with the arbitration.

A newly adopted section of the Uniform Code states that a claim submitted as a class action shall not be eligible for arbitration. The rule also sets forth the circumstances where a claim encompassed by a putative or certified class action may or may not be eligible to be filed in arbitration. For further guidance you should refer to the rule and discuss its application to a particular case with the staff of the SRO where you intend to file your claim.

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