Dispute Resolution

FINRA Dispute Resolution operates the largest arbitration and mediation forum in the securities industry. FINRA Dispute Resolution resolves disputes in a fair, expeditious, and cost-effective manner between customers and securities firms and their associated persons and between associated persons and securities firms.

 

In arbitration, impartial persons who are knowledgeable in the areas in controversy decide disputes between two or more parties. At the hearing, each party gets a full and fair opportunity to present its position through documentary evidence and testimony. Thereafter, the arbitrators render a final and binding decision subject only to review by a court on a very limited basis. For most disputes with an amount in controversy less than $25,000, an arbitrator decides the case based upon the parties' written submissions.

 

Although filing, processing, and hearing fees are required, arbitration is typically less expensive and less time-consuming than court proceedings.

 

FINRA rules require that all brokers and brokerage firms submit to arbitration to resolve investment-related disputes with their customers. Mediation, however, is a voluntary process in which the mediator, an impartial person trained in facilitation and negotiation techniques, helps the parties reach a mutually acceptable resolution. In mediation, as distinguished from arbitration, the mediator does not impose a solution, but rather, works with the parties to create their own solution.

 

Mediation is an informal, flexible process that is generally less expensive than arbitration. Mediation proceeds expeditiously and approximately 80 percent of the cases in the FINRA Mediation Program result in settlement. However, in the unlikely event that a settlement is not reached, the parties may still arbitrate their dispute.

 

Arbitrations at FINRA are conducted in accordance with the Code of Arbitration Procedure as developed by the Securities Industry Conference on Arbitration. Mediations are conducted in accordance with the rules developed by the FINRA Arbitration and Mediation Committee. The SEC has oversight authority over both processes.

 

Arbitration and mediation are separate from the functions performed by the District Offices, which include surveillance and enforcement functions that may result in the assessment of sanctions or other disciplinary measures against member firms or their associated persons.