Series 6

AAA

Customer Accounts - Code of Arbitration Procedure

Arbitration
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
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