FINRA Arbitration

Arbitration is an efficient alternative to litigation to resolve a dispute. FINRA allows for an arbitration forum in connection with the rules approved by the SEC, but has no part in deciding the case. FINRA’s dispute resolution forum is neutral. While FINRA staff members help coordinate the dispute resolution process, they are not involved in rendering judgments.

The first step for investors who want to file an arbitration is to submit a Statement of Claim which includes a description of the dispute, the parties involved and the amount of damages you are seeking. Arbitrators are then ranked by both parties and selected by FINRA.

Arbitration panels are composed of one or three arbitrators who are selected by the parties depending on the total alleged damages. The Arbitrator(s) reviews the claims filed, coordinates oral arguments for both parties, reviews all of the documentary and/or testimonial evidence, and then renders 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.

The FINRA Arbitration hearing location will almost always take place at the location closest to the Claimant (aka the investor who lost money). However, FINRA allows for a different hearing location if the parties agree. Every state has one or more hearing locations.

Arbitration is generally confidential, and documents submitted in arbitration are not publicly-available, unlike court-related filings. Investors can also request mediation through FINRA when they have a dispute involving the business activities of a registered brokerage firm or one of its registered brokers. If you want to bring your claim before FINRA, it must be about an incident that took place within the last six years. However, there are limited exceptions that our firm can look into that will allow your claim to survive beyond the FINRA six-year rule.

Arbitration cases that settle are typically resolved in less than a year. When an arbitration case goes to hearing, it typically takes anywhere from 12- 18 months. In either case, arbitration is usually faster than most court cases. There’s usually no depositions in the arbitration process unless extenuating circumstances exist that would require a particular party’s testimony to live questioning before the actual hearing.

The hearing typically takes place in a conference room at a hotel. It is advised that Claimant’s arrive to the hotel early to run through any last minute adjustments with their attorney. When walking into the hearing room it is important that no one engages in any off-the-record conversations with the arbitrators. The arbitrators usually sit at the head of the table or have a separate table near the front of the room. Claimants and Respondents sit with their attorneys, expert witnesses, fact witnesses, on opposite sides. The rest of the hearing process follows closely with what you would see in a typical court room trial. Both sides deliver their opening statements, followed by witness questioning, and concludes with a closing statement. Depending on the number of witnesses, most hearings last anywhere from 2-4 days.

If you feel that you’ve been victimized by your stock broker and have any questions regarding the arbitration process, please contact us immediately for a *FREE evaluation. A securities lawyer experienced in FINRA arbitration cases will review your financial statements and provide you immediate feedback.