Arbitration and mediation are ways in which disputes involving securities and employment between brokerage firms, brokers, or investors can be resolved. These represent efficient and cost-effective resolution methods. So, what happens in FINRA arbitration? When investors file an official arbitration claim through FINRA, it means they have a dispute that involves the actions of a brokerage firm or one of its individual brokers. To be eligible for consideration, the alleged act that the claim is about must have occurred within the statute of limitations, or past six years.
Arbitration v. Investor Complaint
Arbitration and an investor complaint are two different things. Arbitration is a means by which dispute resolution can be undertaken. An investor complaint is made when an individual simply wants to alert FINRA of the potentially unethical activities of brokerages or their brokers; to do this, making an investor complaint through FINRA’s complaint center will accomplish that.
If you file an arbitration or mediation case, you are doing so to seek damages. While arbitration and investor complaints are two different things, they can be done simultaneously; an investor can file a complaint through FINRA’s complaint center and file for arbitration at the same time.
Arbitration is akin to going to court, but it does not take as long, is less expensive, and is not as complicated a process as litigation. In arbitration, the parties involved select a neutral third party (arbitrator) to help them reach a settlement out of court. In these instances, the arbitrator’s decision is referred to as an “award,” and that decision is final and legally binding.
In exchange for arbitrating the claim, you can’t have it decided in court. Dispute resolution through arbitration involves a FINRA arbitrator or a panel of three arbitrators listening to the parties arguments, studying any relevant evidence, and reaching a decision. If an arbitration case reaches the hearing level, it can take as long as sixteen months to reach an award decision.
The arbitration process is determined by the size of the claim. For larger claims that involve more than one-hundred thousand dollars, an in-person hearing is determined by a small panel of three arbitrators. In smaller claims of up to fifty thousand dollars, these can be decided through a simpler arbitration process with one arbitrator hearing the arguments, reviewing the evidence, and reaching a decision without the necessity of an in-person hearing.
If you have a concern regarding the actions of a brokerage firm or one of their brokers and feel you have been cheated, you are entitled to pursue a claim with a FINRA attorney. Going through FINRA arbitration is a less complicated process than taking the claim to court. It is less costly in the long run and resolutions are reached faster.