How are the Parties Notified of Decisions?

When the arbitrators have reached their decision and have signed an award, copies will be provided to the parties through the FINRA online portal. The award shall be in writing and signed by a majority of the arbitrators. Occasionally an arbitrator will dissent from the decision of the other two arbitrators. When that happens, the dissenting arbitrator can explain the reasons for his disagreement, but it doesn’t change the award. Although arbitration awards are now publicly available, they are not allowed to be used in securities arbitrations as precedent. The primary reason for this is that most awards contain no rationale or explanation at all. No one but the arbitrators know how they arrived at their decision when the decision is simply a dollar amount.

Arbitrators are not required to write opinions or provide reasons for the award. The parties can agree in advance of the arbitration hearing to ask the panel to provide an explained award. FINRA used to charge the parties $400 for an explained decision, but beginning January 2017, it removed the fee requirement. I can only see requesting an explained decision if I have a client who really wants one.

The award will contain the names of the parties, the names of counsel, if any, the dates the claim was filed and the award was rendered, the number and dates of the hearing sessions, the location of the hearings, a summary of the issues including the type(s) of any security or product in controversy, the and other relief requested, the damages and other relief awarded, a statement of any other issues resolved, the names of the arbitrators, and the signatures of the arbitrators concurring in the award.

The good thing about securities arbitration awards, as opposed to court decisions, is that securities arbitration awards must be paid within 30 days of receipt unless a motion to vacate has been filed in court. Because the grounds for any motion to vacate are extremely narrow, awards are almost always paid within 30 days. Brokerage firms have strong incentive to timely pay arbitration awards, because if they don’t, they risk losing their licenses and going out of business.

There are very rare circumstances that might require going back to the arbitration panel after an award is rendered. Since each arbitration panel writes their own awards, sometimes clarification is needed. It is not possible to go back to the arbitration panel with additional, new evidence after the hearing is concluded. In other words, arbitrators are not allowed to reconsider a decision because new evidence has been found after the award was rendered. For this reason, it is critical that a party’s case be carefully and thoroughly prepared, as that will ensure that all relevant facts and evidence will be presented to and thus considered by the arbitrators.

In the prehearing conference, a briefing schedule will be decided upon. Although briefs may have been filed by the parties prior to the arbitration hearing, sometimes an arbitration panel may ask for something additional to be briefed. For example, a panel may want a brief on the authority for awarding attorney’s fees. Of course, this would be a wonderful request to receive from an arbitration panel, however, my practice is to ensure that the authority for awarding attorney’s fees is in my exhibit books.

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