The Financial Industry Regulatory Authority Dispute Resolution

FINRA operates the largest securities dispute resolution forum in the United States, and has extensive experience in providing a fair, efficient and effective venue to handle a securities-related dispute. The resolution of problems and disputes is accomplished through two non-judicial proceedings: arbitration and mediation.

Arbitration and mediation are two distinct ways of resolving securities and employment disputes between and among investors, brokerage firms and individual brokers, and offer a prompt and inexpensive way of resolving issues.

Investors can file an arbitration claim or request mediation through FINRA when they have a dispute involving the business activities of a brokerage firm or one if its brokers. To be considered, the alleged act resulting in a claim must have taken place within the past six years.

Some investors are confused about the differences between resolving monetary disputes through arbitration or mediation, and filing an investor complaint. These are unrelated. Dispute Resolution is not the same as filing an investor complaint.

If you are looking to recover damages, filing an arbitration or mediation case offers you a way to seek damages. Investors are not limited to one or the other option, you can file an investor complaint and file for arbitration.

What is FINRA Arbitration?

Arbitration is similar to going to court, but is usually faster, cheaper and less complex than litigation. It is a formal alternative to litigation in which two or more parties select a neutral arbitrator to resolve a dispute.

The arbitrator’s decision in the dispute is called an award. The decision is final and binding. In resolving disputes through arbitration, a FINRA arbitrator or panel will listen to the arguments set forth by the parties, study the testimonial and/or documentary evidence, and then give a decision. When an arbitration case goes to a hearing, it can take up to 16 months for an award to be determined.

The arbitration process works differently depending on the size of the claim. Claims involving more than $100,000 require an in-person hearing decided by a panel of three arbitrators, with one chairing the hearing.

Smaller claims are decided by one arbitrator.  If a claim is less than $50,000 it may be decided through a Simplified Arbitration Process. The arbitrator reviews all the materials presented by the parties without an in-person hearing.

What is FINRA Mediation?

Mediation can be initiated at any time before arbitration commences and even during an arbitration case before it concludes. It offers a flexible alternative to arbitration. Mediation is an informal process in which a trained, impartial mediator facilitates negotiations between disputing parties, helping them find a mutually acceptable solution. Both parties in a dispute must agree to mediation. FINRA does not require parties to mediate.

FINRA mediators have expertise in certain subject matters, so parties can select a mediator who is knowledgeable in the particular securities or business area that is in dispute.

Since mediation is a voluntary process, it can be halted by either party at any time. The majority of mediation result in settlement, close to 80 percent, and the process is usually much faster than arbitration. Mediation is not binding until the parties reach and sign a settlement agreement, and it doesn’t impose a solution.

FINRA Attorneys

The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to the representation of investors in FINRA arbitration claims against brokerage firms throughout the United States.

For a free consultation with a securities attorney, please call The White Law Group at (888) 637-5510. To learn more about The White Law Group, visit www.WhiteSecuritesLaw.com.