As a general rule, arbitration may only be used as an alternative to litigation if the parties agree to arbitration or if they have a contract requiring them to arbitrate. Most members of the brokerage industry commonly put language regarding mandatory arbitration of claims in the paperwork they have customers sign. Without knowing it, you may have agreed to arbitrate any claim against your broker in your initial customer agreement or in a subsequent margin agreement. Depending on the language used, your claim may be arbitrated under FINRA rules or under the rules of another arbitration provider, like the American Arbitration Association. Review of the paperwork you signed with your broker will let you know the specific arbitration terms to which you have agreed.
Most securities arbitrations however take place under the control of the Financial Industry Regulatory Authority (FINRA) because it has rules requiring members to arbitrate customer complaints upon request. All stockbrokers and brokerage firms should be FINRA members and most securities arbitration claims involve allegations of broker-dealer wrongdoing, common and state law claims, and typically claims involving violations of FINRA rules and regulations.
Whether you choose arbitration or are required to participate in it, most arbitration proceedings generally use court-like rules and procedures to resolve claims. FINRA has its own Code of Arbitration procedure that is very informative and provides guidance on the arbitration process.
Since 1992, attorney Gregory Tendrich has concentrated his practice to securities/stock and investment related cases and claims.
- Mr. Tendrich spent nearly a decade as an in-house lawyer for regional and national stock brokerage firms.
- Mr. Tendrich is a FINRA arbitrator.
- Mr. Tendrich is a certified mediator.
Let Mr. Tendrich's knowledge of the arbitration process work for you.
Depending on the size of your claim, FINRA arbitrations will typically involve a panel of one or three decision makers or arbitrators. In a three person arbitration panel, one arbitrator will be a member of the securities industry and the other two will be "lay" people, and may include teachers, lawyers, business owners, accountants, firefighters and police officers.
During the arbitration, the arbitrators will determine what evidence is heard; will hear testimony from witnesses and may consider expert testimony and then will consider all evidence presented to reach a decision. A typical securities case can usually be heard in a week or less; however, each case is unique and if more time is required, it will be requested.
An investor usually receives a decision regarding their arbitration claim from the arbitration panel within thirty days of the arbitration proceeding. Provided the firm and/or broker is a FINRA member, most arbitration awards are promptly paid because of FINRA rules and requirements to do so.
Contact Mr. Tendrich for more information about Securities Arbitration.
