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- 1. Under what circumstances can an arbitration award ruling be appealed?
- Arbitration is final and binding, subject to review by a court only on a very limited basis. However, a party may file a motion to vacate the arbitration award in a federal or state court of competent jurisdiction pursuant to the Federal Arbitration Act or applicable state statute. There are limited grounds for vacating an arbitration award, and the motion to vacate must be filed within the time period specified by the applicable statute.
- 2. If I am awarded monetary relief in an arbitration, does the company and/or the registered representative have an obligation to pay me?
- Pursuant to Code of Arbitration Procedure Rule 12904 for Customer Disputes and Rule 13904 for Industry Disputes, all monetary awards shall be paid within 30 days of receipt, unless a motion to vacate has been filed in a court of competent jurisdiction. FINRA firms and their associated persons are individually responsible with complying with the terms of an award against them. FINRA Dispute Resolution has implemented a system of monitoring and tracking compliance with arbitration awards against members and associated persons. Therefore, we request prevailing claimants to notify us in writing when their awards have not been paid within 30 days of receipt of the award, and require firms to certify in writing that they have complied with awards against them or their associated persons. Pursuant to Article VI, Section 3 of the FINRA By-Laws and the Rule 9554 Series, FINRA may suspend or cancel the membership of any active member or the registration of any active associated person who fails to comply with a FINRA arbitration award or who fails to honor a written and executed settlement agreement obtained at an arbitration or mediation proceeding conducted under the Code. In addition, FINRA will institute suspension proceedings against a terminated associated person for failing to pay an award or settlement as long as the expedited proceedings are initiated within:
- Two years after the award was rendered, or
- Two years after the settlement agreement was entered into.
- 3. If an award is rendered against a firm or an associated person, what options are available for the firm or associated person with respect to Rule 9554 proceedings?
- Article VI, Section 3 of the FINRA By-Laws and the Rule 9550 Series permit FINRA to suspend or cancel the membership of any current member or the registration of any current associated person who fails to comply with a FINRA arbitration award or who fails to honor a written and executed settlement agreement obtained at an arbitration or mediation proceeding conducted under the Code of Arbitration Procedure. Pursuant to Rule 9550 Series, suspension or cancellation will not occur if the member or associated person can show one of the following:
- the member or associated person paid the award in full;
- the member or associated person entered into a fully-executed, written settlement agreement with the claimant(s), and obligations thereunder are current;
- the member or associated person timely filed an action to vacate or modify any award and such motion has not been denied; or
- the member or associated person filed for bankruptcy protection and the award has not been deemed by a Federal court to be non-dischargeable.
- 4. Can you tell me if all FINRA arbitration awards are taxed by the IRS?
- We cannot provide legal or tax advice. You may wish to consult an attorney or tax advisor.