If you lost money due to broker misconduct or fraud, you may be wondering how you recover your losses. Do you need to go through a formal arbitration proceeding or is there a less formal way of resolving your broker misconduct case? There is an alternative to stockbroker arbitration and litigation in regards to settling a dispute with your broker. It is known as mediation. The Financial Industry Regulatory Authority (FINRA) handles over 1,000 cases in stockbroker mediation on an annual basis. According to FINRA, many of the cases that go through their mediation program settle within a few weeks to a few months after making a formal agreement to mediate.
Steps in the Stockbroker Mediation Process
The following will occur during the mediation process:
The mediator is selected. When you choose mediation, both parties will agree upon a neutral third party to aid in the negotiations. This person will possess a thorough understanding of securities law. The mediator will not be deciding the outcome of the case. Instead, he or she will focus on guiding both parties to an acceptable solution.
An opening session is held. This session involves both parties and the mediator. Each side will have the opportunity to explain background information, key facts, damages and liability.
Separate meetings take place. The mediator will meet privately with each party following the opening session, which are referred to as caucuses. During these caucuses, the mediator will hear the critical issues pertaining to the dispute. These meetings are confidential and the purpose is to help the parties move closer to a settlement.
Proposed resolution is made. During the mediation process, both sides have the chance to brainstorm solutions that would be acceptable to each party. If the parties agree to a solution, the dispute is resolved and a settlement agreement is signed.
Mediation is voluntary. If you are not satisfied with the outcome of the negotiations, you do not need to sign the settlement agreement. You can proceed to arbitration. Often, the most effective time to mediate a claim is once the formal arbitration claim is pending with FINRA and the parties have completed all the fact-finding and evidence gathering.
The Many Benefits of Stockbroker Mediation
If you have a complaint against your stockbroker or brokerage firm, stockbroker mediation may be the right answer for you. Mediation provides a chance to hash out your differences and potentially come to a settlement in your case, and you don’t give up your rights to pursue arbitration or litigation later on if it doesn’t work out. Mediation can have many benefits:
Mediation usually moves quickly, and you may be able to settle some portions of your dispute even if you can’t agree on everything. This means that later arbitration can move more quickly—and you’ll have a better understanding of your case going into arbitration.
Mediation may be a more cost-effective solution in many cases because the expenses are generally lower and you potentially stand to miss less time at work or in your personal life.
Because the mediator has no power to decide the settlement, you have more control over the process and can directly address concerns with your broker or brokerage company.
More options for resolution.
Because it is informal and voluntary, you may have the power to come up with more creative solutions for settlement than you would have access to in arbitration or litigation.
Coming to an Acceptable Resolution in Mediation
If an acceptable resolution has been reached, the following will occur:
A document, which includes all of the terms of the settlement, will be drafted. Parties can protect themselves by signing this document, also referred to as a memorandum of understanding of essential terms, at the end of the process if a settlement was reached.
A written settlement will be executed. Once all of the terms have been agreed to, a written settlement is be created and signed. A signed written settlement is final and binding.
You can learn more about what to expect during the mediation process by watching attorney Chad Kohler's video below:
Do I Need a Securities Mediation Attorney?
Even though mediation is considered to be less formal than other forms of dispute resolution, by no means should you attempt it alone. The brokerage firm will be relying on their group of sophisticated defense lawyers, even during the mediation process. It is therefore in your best interests to have an experienced securities mediation lawyer on your side, guiding you through the process. For more information or for a free case evaluation, contact Meyer Wilson by calling or filling out our online form. We have represented over 800 individual and institutional investors from across the country in securities mediation, arbitration, litigation, and class action lawsuits.