Investors who feel wronged often look to the federal court system for redress. But the Financial Industry Regulatory Authority, the oversight authority for brokerages and brokers, has an alternative dispute resolution process that is faster and often, much cheaper than full litigation.
One ADR process that FINRA offers is mediation. Under mediation, the dispute between and among investors, brokerage firms and individual brokers are mediated by a neutral third party. This third party’s goal is to get the parties to agree on a mutually agreeable solution without the need for arbitration or litigation. They are independent, and the process is confidential.
Arbitration is like litigation, but without having to go to court. The process is cheaper, faster and does not have the complexities of federal litigation. The parties in dispute appear before a neutral third party, the arbitrator, who decides and resolves the dispute. That award is final and binding on all the parties. These arbitrators are also independent, and they are chosen by the parties. The arbitration process itself is controlled by SEC rules.
Unlike protracted litigation that can take years. Both FINRA ADR options can take much less time and expense. This means that the costs associated with litigating the issues are much less, and the aggrieved parties can still get the justice they want.
Aggrieved parties, usually, Orange County investors can file with FINRA a request for mediation or an arbitration claim when they have a dispute at under $100,000. These disputes involve brokerage firm business activities or brokers themselves, and the alleged bad acts must have occurred within the prior 6 years.