FINRA’s arbitration process is designed to handle a wide range of disputes that arise within the securities industry, including:
- Disputes between investors and brokers: This includes cases involving fraudulent investment advice, misrepresentation, breach of fiduciary duty, churning, unauthorized trading, and failure to supervise.
- Disputes between advisors and brokerage firms: This includes cases involving employment disputes, compensation issues, promissory notes, and unfair competition.
- Disputes between broker-dealers: This includes cases involving business disputes, such as breach of contract, fraud, and misrepresentation.
FINRA doesn’t offer an arbitration platform for every securities-related dispute. For individual investors, FINRA will look at a claim for arbitration only if:
- The dispute arose between an investor and a FINRA-registered individual financial advisor or company, or an individual investor and a brokerage firm.
- The arbitration claim was filed within six years of the claim’s accrual date.
If both of these requirements are fulfilled, FINRA may consider the arbitration request.
However, FINRA must accept arbitration requests if these three benchmarks are met:
- All parties are bound by a written agreement to settle disputes through arbitration.
- The dispute occurred between an individual investor and a brokerage or broker who is a FINRA member.
- The dispute concerns securities.
How does arbitration with FINRA work?
Arbitration, an alternative to filing a case in civil court, is a less formal process designed to handle claims more efficiently than court. FINRA’s arbitration process is used to resolve monetary disputes between brokers and investors and between advisors and brokerage firms, and its arbitrators can issue monetary judgments and order brokers to deliver securities. Many monetary claims for both investors and brokers need to go through FINRA’s arbitration in order to resolve disputes. Per FINRA Rule 12200, claims that investors have against their securities firm and/or securities professionals are resolved through the FINRA arbitration process instead of the civil court if FINRA is the method presented in the agreement.
The arbitration hearing is similar to a court trial, where the parties present evidence and arguments to a neutral arbitrator or panel, who then makes a final decision called an award. It is important to note that there is no right to appeal the award to another arbitrator, but limited circumstances may allow for an appeal in court.
FINRA’s arbitration forum operates under the SEC’s rules and guidelines, with FINRA providing the platform and enforcing the rules while the arbitrators make the decisions. Typically, it takes over a year for arbitrators to issue an award. This means it’s actually more quick than many court processes. Additionally, the parties have the option to negotiate a settlement without going through arbitration.
Our FINRA Arbitration Attorneys can fight for you
If you’re facing a dispute with a financial professional or firm, don’t fight it alone. Our FINRA arbitration attorneys have the experience and expertise to help you navigate the complex arbitration process and fight for the outcome you deserve. Contact us today and let us help you protect your rights.
