Securities Arbitration is a process where disputes between parties are resolved in a neutral forum before the Financial Industry Regulatory Authority or FINRA. The arbitration process is similar to traditional court. However, Securities Arbitration is a less complex process to recover losses that is typically completed faster and at lower costs than court cases. Although FINRA makes available an arbitration forum pursuant to SEC approved rules, independent arbitrators chosen by the parties decide the award not FINRA. Click here for more details concerning the arbitration process.

Differences between Arbitration and a Lawsuit in Court

• The disputing parties select a neutral arbitrator or panel of arbitrators to decide if wrongdoing occurred and, if so, how to compensate the wronged party for it.

• Arbitration decisions are final and binding on the parties.  Arbitration decisions can only be appealed on limited grounds making it unlikely they will be overturned.

• FINRA arbitrators are bound by FINRA’s Code of Arbitration Procedure.

• The documents and evidence submitted in arbitration are treated as confidential so they are not publicly available.

If you have fallen victim to broker misconduct and other types of investor claims including negligence, churning and misrepresentation. Victims of investment fraud and broker misconduct are entitled to receive damages to compensate for any losses that occurred.

Investors should act promptly to avoid losing their right to seek a remedy or recover funds. For investor disputes with a FINRA registered individual or entity, and disputes between or among members of FINRA (e.g., brokerage firms, brokerage firms and brokers, or brokers); the claim must be filed within 6 years from the time the events giving rise to the cause of action. Additionally, state and federal law may impose other time limits, called “statutes of limitation,” may also apply, so do not delay.

The Financial Industry Regulatory Agency (“FINRA”) is authorized by Congress and works under the supervision of the Securities and Exchange Commission (“SEC”) to protect investors by overseeing operations of brokerage firms. FINRA plays an important role in safeguarding the integrity of the financial system and undertakes certain efforts to protect the investing public against fraud and broker misconduct. For example, FINRA deters broker misconduct by enforcing the rules governing the ethical conduct of brokers and brokerage firms. FINRA also detects and prevent wrongdoing by examining brokerage firms to ensure they are complying with the rules, and educate and inform investors. FINRA works to ensure that investors can participate in the market with confidence. To protect investors, FINRA strives to ensure:

• Every investor receives the basic protections they deserve

• Any broker who sells a securities product is a qualified and licensed financial professional

• Every securities product advertisement used is truthful, and not misleading

• Any securities product sold to an investor is suitable for that investor's needs

• Investors receive complete disclosure about the investment product before purchase

Arbitration is a less formal process than litigation, typically resulting in faster turnaround times than court cases. The turnaround time for arbitration varies, and can be affected by many factors, including the number of parties and witnesses involved, the complexity of the issues, the volume of discovery and the schedules of the parties and arbitrators. View dispute resolution statistics for more detailed data on turnaround time for all cases (including settlements and withdrawals), for cases that close by hearing, and for cases decided on the papers.

If you are an aggrieved investor, you will generally fare better with the help of an experienced SEC lawyer to resolve a securities arbitration dispute.  An SEC lawyer can help you assess whether you have a claim that would likely lead to the recovery of your hard-earned money.  You should consider hiring an SEC lawyer if have experienced a problem with an investment in any of the scenarios mentioned below.

Claims of false or misleading misrepresentation of securities. Brokers must accurately present complete material information about an investment being recommended that include, the risks of investing in a particular security, fees or commissions charged, and company financial information. 

Claims of misappropriation or removal of investor’s funds or securities from an investor’s brokerage account without authorization.

Claims where a broker switched an investor from one mutual fund to another without a legitimate purpose for the switch.

Claims of fraudulent misrepresentations to induce the purchase or sale of a security such as guaranteed profits, that investor will not lose money on a securities transaction, or that broker will share in any losses in the investor’s account. 

Claims of broker misconduct and/or brokerage firm misconduct.