If my broker dispute is handled in mediation, will the decision be considered binding?
| November 18, 2019
Mediation is a voluntary dispute resolution process that is non-binding. The mediator is a neutral third-party who will facilitate negotiations between you and the brokerage firm; however, he or she will not be the one to make a final decision. The mediator may provide an evaluation of the claims and defenses and may also recommend a settlement to both sides but cannot force either party to accept the recommendation.
Since the mediation process is non-binding, most brokerage firms will not pay the full value of the claims in a mediation session unless a formal FINRA arbitration claim is also pending. Mediation and arbitration can occur on parallel tracks so that if an acceptable compromise is not reached during mediation, the formal arbitration process can continue and move toward a final hearing (which will result in a binding determination of the claim).
During final arbitration hearing, you will have the chance to show an impartial panel of arbitrators evidence that backs your claim. You can also bring in witnesses. Once the panel reaches their decision, which is known as an award, it is considered final and binding.
Attempting to resolve a broker dispute on your own is not advisable. The brokerage firm will try to limit their liability and will hire sophisticated lawyers who are well-versed in the intricacies of the securities laws and regulations.
Out attorney Chad Kohler put together this video giving more information on what to expect during a mediation.