Series 6

By Investopedia 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

You May Also Like

Related Articles
  1. Investing Basics

    Online Portfolio Management, DIY or ...

  2. Insurance

    Municipal Bond Tips For The Series 7 ...

  3. Retirement

    6 Proven Tips For Series 6 Success

  4. Insurance

    Tips For Passing The Series 6 Exam

  5. Professionals

    Banker Or Broker: Which Career Is Right ...

Trading Center