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Printer-Friendly Last Updated: 8/6/07 Start an Arbitration or Mediation

Initiate a mediation or arbitration with FINRA Dispute Resolution. For an overview of the differences between these two forms of dispute resolution, view "Comparison Guide to Electing Mediation or Arbitration" and/or Mediation Myths & Realities.

How to Start a Mediation

Mediation is an informal, voluntary, and non-binding approach in which an independent and trained neutral—a mediator—facilitates negotiations between disputing parties, helping them to find their own mutually acceptable resolution. The resulting settlements often save the parties substantial time and expense. Also, mediations can be initiated at any stage of the arbitration process.

Intent to Mediate Form—If you are interested in initiating a mediation, review and complete the Intent to Mediate form to indicate interest in having your case mediated through the FINRA Mediation Program.

For more information about the FINRA Mediation Program, send us an email, and visit our Mediation page.

Mediation Case Flow—A simple diagram displaying the high-level steps of the mediation case process, from submission of information to FINRA Dispute Resolution to the possible settlement of the case.

How to Start an Arbitration

Arbitration is a dispute resolution mechanism to help determine if aggrieved parties are entitled to recover damages. In arbitration, an impartial person or panel hears all sides of the issues as presented by the parties, studies the evidence, and then decides how the matter should be resolved. Arbitration is final and binding, subject to review by a court only on a very limited basis.

Caution. When deciding whether to arbitrate, bear in mind that if your broker or brokerage firm goes out of business or declares bankruptcy, you might not be able to recover your money-even if the arbitrator or a court rules in your favor. Over 80 percent of all unpaid awards involve a firm or individual that is no longer in business.

(That is one of the reasons why it is so important to investigate the disciplinary history of your broker or brokerage firm before you invest. For tips on how to do this, please read the SEC publication entitled Check Out Your Broker. Through FINRA's BrokerCheck Program, investors, and others, can find out background information about brokers and brokerage firms.)

An April 11, 2003 General Accounting Office Report (GAO-03-162R) on securities arbitration confirmed that the most frequent reason an arbitration award goes unpaid is that the firm or individual respondent is out of business.

Case Results
Most arbitration cases end with a settlement between the parties either through direct negotiation or through mediation. In recent years, parties agreed on a resolution in about 60 percent of all cases. Other cases are withdrawn or closed before the process begins. For example, more than 3,600 investor cases closed in 2001. Arbitrators decided the outcome in 1,365 of those cases and in 725 cases (53 percent of the decisions) arbitrators awarded damages to investors. See the FINRA Dispute Resolution Statistics.

During the first quarter of 2003, arbitrators in FINRA cases granted monetary damages against a brokerage firm or against a registered representative in 287 cases. In 78 of those cases, the award was not paid in full. In 67 cases, (over 85 percent of the unpaid awards) the party responsible for the damages was a broker-dealer firm or associated person that had left the securities industry. FINRA aggressively pursues disciplinary action against all active firms or individual brokers that do not promptly fulfill their obligations. (See FINRA's guidance entitled What If I Don't Get Paid?).

Deciding Whether to File a Claim
Firms and individual respondents who remain in the business generally pay arbitration awards entered against them, and information about unpaid awards should not discourage you from pursuing an arbitration case against most potential respondents. If you already have a dispute with your broker, and file an arbitration claim, FINRA will let you know once you have filed a claim if any of the respondents in your case is out of business. In those cases, you have the options of pursuing claims against those parties in court (NASD Customer Code Rule 12202), or - if the respondent does not participate in the case by responding to your claim - through expedited arbitration procedures (NASD Customer Code Rule 12801 and Industry Code Rule 13801). To help you decide whether to pursue a claim, we suggest that you consult with an attorney.

Online Arbitration Claim Filing
FINRA Dispute Resolution is pleased to announce the official launch of online Arbitration Claim Filing on our Web site. Any party may submit an arbitration claim, using the online system on a voluntary basis.

Materials to Initiate an Arbitration Claim
These materials will guide interested parties through the process of filing a claim. Review the instructions and send completed forms with any appropriate fees to FINRA Dispute Resolution.

Notice to Attorneys and Parties Represented by Out-of-State Attorneys

In some jurisdictions, an out-of-state attorney cannot represent a client in arbitration. In these jurisdictions, it is considered the unauthorized practice of law to provide such legal representation without being admitted to the appropriate Bar.

Non-California Attorney Certification Form
Review the FINRA guidelines for compliance with Cal. Code of Civil Procedure Section 1282.4(c), as amended. Attorneys not admitted to practice in California who seek to represent a party in a FINRA arbitration proceeding in California must complete this Certification Form. The Form must be filed with the FINRA Dispute Resolution, Western Region Office in Los Angeles, California. The Form also must be filed with the Office of Certification, State Bar of California, in San Francisco, California, and must be served upon all other parties and counsel in the arbitration whose addresses are known to the attorney.

Other Exchanges Using FINRA's Forum
A list of exchanges that FINRA has agreements with for the provision of dispute resolution services.

Arbitration Filing Fee Calculator
Calculate arbitration deposit fees. In order to expedite the filing process for claims, Dispute Resolution provides this fee calculator to help parties determine the filing cost of their claim. Parties should use the calculator to expedite the filing process for claims by avoiding delays in the process due to potential filing fee deficiencies.

What If I Don't Get Paid?
Brokers and FINRA member firms must pay arbitration awards within 30 days of receipt, unless a motion to vacate is filed in court. Click here if you want more information about what to do if a broker goes out of business, or you have not heard from the brokerage firm.

Parties should also review the information contained on the Investor Education section of the Securities and Exchange Commission (SEC) Web site.

Tour of the Dispute Resolution Process
The Tour provides information about the process of dispute resolution, from filing a claim to the final decision and award.

FINRA Dispute Resolution Fact Sheet
An overview of alternative dispute resolution at FINRA.

If you have any questions, please call the Office of Dispute Resolution at (212) 858-4200 or send us an email.