FINRA Arbitration v. Court

The FINRA arbitration process provides an alternative for parties in a dispute that allows them to avoid litigation. Parties frequently choose to use arbitration because it is quite often cheaper, faster, and less complicated than litigation. However, these benefits are impacted by the nature of the dispute and the claim amount that is involved.

Arbitration involves a neutral third-party hearing both sides of the dispute and then issuing a ruling that is binding on the parties. Under FINRA arbitration, a panel of one or three arbitrators decides the dispute, with the parties selecting the arbitrators. In the case discussed above, because of the claim amount involved, the panel must be three arbitrators.

In many ways, arbitration follows a similar process that litigation does. The parties can have an attorney represent them throughout the process. In most circumstances, this is highly advisable. Further, the arbitration panel will read pleadings filed by the parties, listen to arguments presented, and study any documentary or testimonial evidence. While the arbitration panel is binding on the parties, it is possible to appeal that decision in a regular court. But, it is important to keep in mind that this must be done within statutory time periods.

FINRA operates the arbitration forum and operates as the securities industry watchdog. Through April of 2015, FINRA’s regulatory arm reports that is has closed 1,215 cases this year. In 2014, FINRA assessed $134 million in fines and ordered $32.3 million in restitution to be paid to harmed investors through 1,397 disciplinary actions against registered brokers.

Unfortunately, brokers sometimes cause investors to suffer significant financial loss. In certain circumstances, these losses may give rise to compensable claims. If you would like more information about the FINRA arbitration process or other protections afforded to investors, speak with an experienced securities laws attorney at Silver Law Group.