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What is FINRA Arbitration?

By Sean Sweeney on October 30, 2011

The short answer is that FINRA Arbitration is, in most cases, where you have to bring your claim if you want to sue your broker or your brokerage firm for any securities fraud or stock-broker misconduct claims you may have.

The Financial Industry Regulatory Authority (FINRA) is the self regulatory body for the financial industry, formerly the NASD. As a general rule, all of the member firms require their investors, as a part of opening their accounts, to sign an agreement indicating that any disputes will be resolved through FINRA Arbitration.

FINRA describes arbitration as follows:

Dispute resolution methods, including mediation and arbitration, are non-judicial processes for settling disputes between two or more parties... In arbitration, an impartial judge, called an arbitrator, hears all sides of the issue, studies the evidence, and then decides how the matter should be resolved. The arbitrator's decision is final.
FINRA arbitration typically involves a panel of three arbitrators (for claims over a certain dollar figure). FINRA provides the following flow-chart for the arbitration process:

The biggest difference between a lawsuit in court and an arbitration through FINRA (other than having arbitrators rather than a judge and jury) is that discovery is extremely limited in a FINRA Arbitration. While there is some document discovery that takes place, there are not any depositions or written interrogatories allowed. This can serve the alleged purpose of making arbitration faster and potentially cheaper for the litigants; however, it also can make it much more challenging for investors to prove their claims, reinforcing the need for experienced counsel to help you in these matters.

If you think you might potentially have a claim against your broker or the broker-dealer, contact an attorney right away to discuss the potential claims and any applicable time limits.

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At The Securities Lawyers, you get hands-on involvement from a partner level attorney. If I'm on your case, there will be associates and paralegals assisting, but I will be the one trying your case, negotiating settlements, and mediating your case. Sean M. Sweeney

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Milwaukee Office

320 E Buffalo St
Ste 611
Milwaukee, WI 53202

Open Today 8:00am - 5:00pm

Open Saturday and Sunday for calls and emails.

More Info Directions (414) 755-5020