How is FINRA arbitration different than a lawsuit in court? If you have
a dispute with your stockbroker or brokerage firm, you typically cannot
bring that claim in court. Rather, you will have to pursue the claim in
mandatory, binding arbitration before the Financial Industry Regulatory
Authority, known as FINRA.
At the time you hired your broker, you were given many documents to sign,
including a mandatory arbitration agreement that was contained within
the customer account opening documents. Essentially, this provision means
that you have waived your right to go to court and you must bring your
claim in FINRA arbitration. Attorney Chad Kohler explains how your arbitrator
or arbitrators are selected in the video below.
FINRA arbitration is different than court in many different ways. The case
won’t be in front of a judge or jury; instead, it will be heard
in front of an arbitration panel consisting of one to three individuals
depending on the size of your claim. The arbitration panel is made up
from a pool of professionals from all backgrounds. They might be lawyers
or they might not be. They will listen to the testimony and evidence presented
by both sides before reaching a decision. The panel’s decision is
referred to as an award and it is final and binding. The FINRA arbitration
process is streamlined and generally, is faster than going to court. If
you win an arbitration award, it is generally paid to you within 30 days
after the award is issued so long as the responsible party is still in
the brokerage business.
There are only very few circumstances in which an arbitration award can
be challenged as opposed to court cases that may be subject to years of
appeals. Because it is a faster process, the costs associated with bringing
a case are often much lower than court cases.
The broker or brokerage firm will most certainly have an experienced and
sophisticated securities lawyer defending them. It is important that you
have an experienced investment fraud arbitration attorney who knows the
ins and outs of FINRA arbitration on your side protecting your interests
and fighting for your rights. A lawyer who may be very experienced in
other types of civil trial work but who does not have the extensive experience
in representing investors against brokerage firms will face a big uphill
battle to learn the law in this area and the procedures of FINRA arbitration.
You can learn more about the FINRA arbitration process by exploring our
website and if you have a case against your broker or brokerage firm,
contact us for a
free consultation. Whatever you decide, hire an attorney with substantial experience in
this area of the law in order to level the playing field in your fight
against the securities industry to recover your losses caused by investment
You can also learn more about the difference between FINRA Complaints and
FINRA Arbitrations by watching this video from attorney Courtney Werning.