Many new accounts now contain a pre-dispute arbitration clause that obligates the customer to submit any disputes with a registered representative or his or her firm to binding arbitration. The clause must be provided with specific wording and in a particular format on the new account form. It is highlighted and preceded by several disclosures:
- Arbitration is final and binding on all parties.
- Parties waive their right to seek remedies in court, including a jury trial.
- Pre-arbitration discovery is more limited than and different from court proceedings.
- The panel of arbitrators will include arbitrators who were affiliated with the securities industry.
- The arbitrator's award does not have to include factual findings or legal reasoning, and any party's right to seek modification or to appeal the ruling is limited.
- Simplified arbitration is available for claims that do not exceed $25,000.
- All awards are considered final and should be rendered within 30 business days of the closing of the record.
- Awards should be paid within 30 days from the date ordered.
A copy of the arbitration agreement must be given to the customer, who must acknowledge its receipt either on the agreement or on a separate document. Usually, this agreement will be included in the standard disclosure form that must be signed by the customer when opening the new account.
Securities Exchange Act of 1934
Financial AdvisorHere's what to do next if your broker stiffs you when you win an arbitration.
Personal FinanceAmericans are going to regain the right to sue a bank or credit card company – but not in all cases. We explain what changes and what doesn't.
TradingFind out how to file a claim with your broker and what you can expect throughout the process.
Financial AdvisorAn alliance of public interest groups is pressuring FINRA to broaden its BrokerCheck tool.
MarketsIf your account has been mishandled, FINRA and the SEC are among several organizations that can help.
TradingWe show you how to resolve a problem without getting the lawyers involved.
RetirementInvesting is a team sport in which the client and financial professional must work together.
RetirementBefore you agree to work for another investment firm, be sure you know what you're getting into.
MarketsFind out the history of FINRA, and how it's organized to monitor the markets and protect investors.
Financial AdvisorMany people research restaurants or movies, but few select brokers or financial advisors with much research. Here's how BrokerCheck can help.