When dealing with disputes in the financial industry, arbitration via the Financial Industry Regulatory Authority (FINRA) can be a suitable alternative to traditional court litigation. Before starting this process, it’s essential to understand key aspects impacting your case and its outcome.
What the process looks like
An arbitrator is set to hear both sides of a dispute and make a binding decision. Compared to court litigation, this process is generally quicker and less formal, yet still demands careful consideration. Here are some critical points to consider:
- Eligibility and filing: You must ensure FINRA can handle your dispute, which usually involves financial advisors, brokers, or investment issues that occurred six years prior. You must submit a Statement of Claim explaining your dispute and the money you seek.
- Selection of arbitrators: Parties can choose a single arbitrator or a panel of three from a pool of qualified individuals. It is crucial to choose arbitrators who possess the appropriate expertise and impartiality.
- Costs and fees: While often cheaper than court, there are still costs, such as filing and hearing session fees. If you are experiencing financial hurdles, you can request a waiver for some fees.
- Discovery process: You and the other party exchange documents, evidence and information. Although it is simpler than a court procedure, it requires thorough preparation.
Understanding FINRA rules can help you avoid mistakes and significantly affect the outcome of your case. FINRA arbitration decisions are final and binding, meaning you cannot usually appeal.
How much time will it take?
Be open to settling the dispute before the hearing. Many cases are resolved this way in just over a year, saving time and money. Cases that go to a hearing typically could take 16 months, depending on the specific characteristics of a case.
Given the complexities and stakes involved in FINRA arbitration, it is strongly recommended to seek professional legal advice. While you can represent yourself, having an experienced attorney can be invaluable for filing, selecting arbitrators, and obtaining all the evidence.
Entering FINRA arbitration requires careful consideration and preparation. By understanding the process, being aware of the critical concerns and seeking legal advice, you can navigate this alternative dispute resolution method more effectively and increase your chances of a successful outcome.