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Arbitration

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Arbitration is a method of having a dispute between two or more parties resolved by impartial persons who are knowledgeable in securities industry disputes. Those persons are called arbitrators. Arbitration of disputes with broker/dealers has long been used as an alternative to the courts because it is devised as a prompt and inexpensive means of resolving complicated issues. There are certain laws governing the conduct of an arbitration proceeding that must be considered by those planning to use arbitration to resolve the dispute. Most importantly, perhaps, is the fact that an arbitration award is final and binding, subject to review by a court only on a very limited basis. Parties should recognize, too, that in choosing arbitration as a means of resolving a dispute, they generally give up their right to pursue the matter through the courts.

Although most business in the securities industry is completed without a problem, disputes and controversies will occasionally arise. Such disputes and controversies can be resolved by impartial arbitration at one of the organizations listed in the services directory. Arbitrations are conducted in accordance with the Uniform Code of Arbitration (Uniform Code or UCA) as developed by the Securities Industry Conference on Arbitration (SICA) and the rules of the sponsoring organization where the claim is filed.

There are some differences among the rules of the sponsoring organizations, such as, the time to serve and file answers to claims, who may serve as public arbitrators, arbitrator selection methods, service of award methods, the availability of prior awards, and whether your name will be made publicly available. Any questions regarding arbitration may be addressed to the Directors of Arbitration or their staff at the sponsoring organizations. Significant differences between the Uniform Code and the procedures of the self-regulatory organizations (SROs) will be highlighted in this guide.

In addition to initiating an arbitration, investors may file their complaints with the appropriate regulatory authorities, such as the Securities and Exchange Commission (SEC), state securities commissions, or one of the SROs listed in the Services Directory, when they believe there has been fraud or that other investors may be at risk. The regulatory agencies may then investigate the complaint and, if warranted, censure, fine, or suspend a wrongdoer. These agencies normally do not recover investor's losses which can be done through arbitration.