What is Securities Arbitration?

Virtually every brokerage firm incorporates into its customer agreement a provision that if you have any type of dispute with the brokerage firm, you agree to resolve that dispute through the arbitration process. As a result, in order to recover for securities claims, investors must seek relief through arbitration.

Securities arbitration, therefore, is an alternative method in which to resolve your claim against the brokerage firm that was handling your brokerage account. Unlike a case that is filed and litigated in court, securities arbitration provides for a private, not public, manner through which your case is resolved.

Almost all securities arbitration cases are filed with the Financial Industry Regulatory Authority (more commonly referred to as FINRA). FINRA has an established system and rules for the arbitration process.

The case is initiated by filing a “Statement of Claim,” which discusses the nature of the dispute and the relief sought (which is generally monetary compensation for losses). The attorneys at Oakes & Fosher handle all aspects of the arbitration process for you. The brokerage firm, thereafter, files an “Answer” in which it provides its arguments and defenses. Unlike a court-tried case, there are no depositions or interrogatories. Instead, there is a standard exchange of documents and information, which apply to almost all cases.

If the parties are unable to settle their dispute (which is usually attempted after the exchange of documents), then the case is presented to an arbitration panel, which consists of three members who generally have a strong understanding of the securities industry as well as the duties and responsibilities of brokerage firms and their brokers. The hearing usually takes place in a private conference room within a hotel near the investor’s residence.

After the parties have submitted the evidence, the arbitration panel convenes to discuss the merits of the case and subsequently issues an award. If a monetary award is issued in favor of the investor, the brokerage firm has a maximum of 30 days to pay the award in full.

Contact our securities fraud lawyers to schedule your free confidential case evaluation.