When you have an investment fraud or misconduct claim, you will likely be facing mandatory arbitration before the Financial Industry Regulatory Authority (FINRA). All brokerage firms in the country force their customers to sign customer agreements that contain mandatory arbitration clauses - if you have a dispute against them, you cannot go to court. You must file your case in FINRA arbitration.
The brokerage firm will most certainly have high-powered sophisticated corporate lawyers defending them. It is therefore imperative that you have an experienced securities arbitration attorney on your side, protecting your interests and fighting for your rights.
Securities arbitration, an alternative to litigation, is the process of resolving a dispute between parties before a panel of arbitrators selected through a process agreed to by the parties. An arbitration award is final and binding with a limited review available by the courts.
Why Are These Cases Handled in Mandatory Arbitration?
At the time you hired your broker, you were given many documents to sign and complete. In most all cases, these papers included a mandatory arbitration provision, which specifically stated that disputes must be arbitrated. Essentially, this provision means the case will not go to court. Most investors don’t pay close attention to this provision until an issue arises.
To initiate an arbitration proceeding, you, or your attorney, will need to file a Statement of Claim and Uniform Submission Agreement with FINRA. Once these forms are filed and the appropriate fees are paid, the parties named in the Statement of Claim will be notified.
They must file an answer within 45 days. If the claim proceeds to arbitration, the case will be heard in front of an arbitration panel consisting of one to three individuals. They will listen to the testimony and evidence presented by both sides, before they reach their decision. The panel’s decision is referred to as an award, and is final and binding. There are only very few circumstances in which an arbitration award can be challenged.
While you may have no other option but securities arbitration, it definitely has its advantages:
While similar to a court trial, FINRA arbitration generally offers a faster and less expensive way to resolve a dispute. The matter will be heard by a single arbitrator or a panel of three arbitrators, depending on the size of your case.
Once the arbitration is filed, it proceeds very much like any civil litigation. There is formal complaint filed, and then the respondent has an opportunity to file a responsive pleading called an answer. Afterwards, the arbitrators are chosen and there is a period of time to conduct discovery - the exchange of documents and information between the parties.
If the case does not resolve by settlement, the arbitrator or arbitrators will hear the case including reviewing testimony and then will make a decision as to the outcome. The arbitrator or panel of arbitrators can issue an award to an aggrieved party. The award is legally binding.
Smaller claims are heard by a single arbitrator and may not require an in-person hearing. More complex cases are handled by a panel of arbitrators. The average time for a FINRA arbitration case, from start to finish, is between 12-16 months - which is typically much faster than court.
In order to increase your odds of winning in arbitration, it is strongly recommended that you retain an experienced investor claims attorney. The majority of cases are resolved via a settlement agreed to between the parties.
According to FINRA, Approximately 69% of customer disputes resolve through settlement with many of them going through mediation. Of the matters that are not resolved through a settlement, 18% are decided by award, 9% are withdrawn, and 4% are closed by other means.
It is important to note that no two investor claims are the same and an outcome in one does not guarantee the same or similar outcome in another.
Arbitration does have disadvantages, such as the following:
The brokerage firm will have sophisticated lawyers on their side who are well-versed in the securities rules, regulations, and procedures. You need a securities arbitration attorney who has experience and resources to help you win your case. At Meyer Wilson, we have represent individual and institutional investors from across the country in securities arbitration, litigation, mediation, and class action lawsuits. We are a law firm that other attorneys turn to when their clients have stockbroker misconduct or investment fraud claims. Our stockbroker arbitration lawyers are licensed in Ohio, California, and Michigan, and represent investors nationwide.