Black’s Law Dictionary defines arbitration as a “method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding.” Arbitration of claims by investors against broker-dealers is generally the result of a contractual agreement. The agreement to open an account between the investor and broker-dealer usually contains an arbitration clause requiring that any dispute be arbitrated. The Financial Industry Regulatory Authority’s (FINRA) Dispute Resolution division is the forum where these claims are brought.
The steps involved to file a claim with FINRA Dispute Resolution include:
- Filing the Claim
- Selecting the Panel of Arbitrators
- Initial Pre-Hearing Conference
- Discovery
- Mediation and/or the Arbitration Hearing
While there is not a requirement that claims be filed by an attorney, it is not advisable to do so. First, the broker-dealer will be represented by an attorney who specializes in defending securities claims and will have likely handled many similar cases before and will have a working knowledge of the discovery process and how to effectively present evidence to the panel. Further, they will generally have had experience striking and ranking arbitrators who will be more favorable to their argument. As such, it is never a good idea to attempt to represent oneself in a securities arbitration matter.
