FINRA Arbitration

From the National Association of Securities Dealers Regulation (NASDR) and The Financial Industry Regulatory Authority (FINRA)                                                                                             

"The following are keywords and questions that are important in understanding your securities arbitration!"

  1. Arbitration Procedures
  2. What is Arbitration 
  3. What Disputes are Eligible for Arbitration?   
  4.  Who are "The Arbitrators?    
  5.  Can I be Represented by an Attorney?  
  6.  How is Arbitration Begun?   
  7.  What Happens After the Claim is Filed?  
  8.  Appointment of Arbitrators 
  9.  Can I Challenge an Arbitrator? 
  10. What are Challenges for Cause? 
  11. How Do I Prepare for a Hearing?  
  12. How are the Hearings Conducted?
  13. How are the Parties Notified of Decisions? 
  14. Glossary of Terms  

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FINRA ARBITRATION


Arbitration Overview

Arbitration is an alternative to litigation or mediation in order to resolve a dispute. Arbitration panels are composed of one or three arbitrators who are selected by the parties. They read the pleadings filed by the parties, listen to the arguments, study the documentary and/or testimonial evidence, and render a decision. The panel's decision, called an "award," is final and binding on all the parties. All parties must abide by the award, unless it is successfully challenged in court within the statutory time period. Arbitration is generally confidential, and documents submitted in arbitration are not publicly-available, unlike court-related filings. However, if an award is issued at the conclusion of the case, FINRA posts it in its Arbitration Awards Online Database, which is publicly available.

The Basics

Time

On average, an arbitration can take a little over a year to complete from the time the claim is filed until an award is rendered.  The turnaround time varies, and can be affected by many factors, including the number of parties and witnesses involved, the complexity of the issues, the volume of discovery and the schedules of the parties and arbitrators. View statistics for yearly data.

Cost

The cost of an securities arbitration case varies. Cost is affected by the amount of the claim, the number of hearing sessions, number of discovery motions, and any postponementsView our fees section for more information.

Eligible Cases

Arbitration cases are eligible to be heard in FINRA's forum if the following criteria are met:

For disputes with investors:

    1. The cases involve an investor and an individual or entity registered with FINRA, such as cases between investors and brokers, between investors and brokerage firms, and between investors and brokers and brokerage firms; and
    2. The claim is filed within 6 years from the time the events giving rise to the dispute occurred. However, the 6 year date is not necessarily triggered by the date of the investment but can also be triggered by the time of discovery of the wrongdoing.

For disputes involving industry parties only:

    1. The cases involve an individual or entity registered with FINRA, such as cases between brokerage firms, between brokers, and between or among brokerage firms and brokers; and
    2. The claim is filed within 6 years from the time the events giving rise to the dispute occurred.

FINRA ARBITRATION (continued)


Eligible Cases

Arbitration cases are eligible to be heard in FINRA's forum if the following criteria are met:

For disputes with investors:

    1. The cases involve an investor and an individual or entity registered with FINRA, such as cases between investors and brokers, between investors and brokerage firms, and between investors and brokers and brokerage firms; and
    2. The claim is filed within 6 years from the time the events giving rise to the dispute occurred. However, the 6 year date is not necessarily triggered by the date of the investment but can also be triggered by the time of discovery of the wrongdoing.

For disputes involving industry parties only:

    1. The cases involve an individual or entity registered with FINRA, such as cases between brokerage firms, between brokers, and between or among brokerage firms and brokers; and
    2. The claim is filed within 6 years from the time the events giving rise to the dispute occurred.


Required Investor Arbitration

An investor must arbitrate at FINRA if:

  1. The arbitration is required by written agreement;
  2. The dispute is with a member of FINRA, which could be a broker and/or brokerage firm; and
  3. The dispute involves the securities business of the broker and/or brokerage firm.

Required Industry Arbitration

A broker or a brokerage firm must arbitrate at FINRA if:

  1. The dispute arises out of the securities business activities of a broker and/or a brokerage firm; and
  2. The dispute is between or among the following members of FINRA: brokerage firms, brokerage firms and brokers, or brokers.

If an investor requests arbitration, a broker or a brokerage firm must arbitrate at FINRA.

Exception to required industry arbitration:

If you are a broker and your dispute involves an issue of employment discrimination, including sexual harassment, the dispute is not required to be arbitrated unless the parties agreed to arbitrate it, either before or after the issue arose.

Resolution and Results

The resolution of arbitration cases vary. Some are decided by the arbitrators; others are resolved by settlement of the parties or through mediation. In a significant number of cases, investors receive monetary or non-monetary relief, either from an award rendered by the panel or a settlement of the parties. For more information on how cases close and how often customers are awarded damages, view our dispute resolution statistics.

Legal Representation

You should consider hiring an attorney to represent you during the arbitration proceedings to provide direction and advice. Even if you do not choose to hire an attorney, the other parties may have counsel. Generally, brokerage firms are represented by an attorney. If you cannot afford an attorney, some law schools provide legal representation through securities arbitration clinics.  

Arbitration Process

View our arbitration process section for a description of the steps required to complete an arbitration.


You may contact Ms. Stoneman for a free consultation by using our convenient contact form. If this is a time sensitive issue you may contact Ms. Stoneman at her office. (719) 783-0303

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