Alternatives to FINRA Arbitration

  • September 9, 2021

When it comes to resolving a securities dispute between investors and brokers, it’s essential to be aware of the dispute resolution options available. 

FINRA arbitration is one of the most popular, non-judicial forms of resolving a securities dispute. However, from the perspective of an investor, what are the alternatives—if any—to opting for binding arbitration?

Read on to learn more—and don’t wait to contact a FINRA lawyer near you with Wolper Law Firm, P.A. to learn more about the options available to you. 

Securities Dispute Resolution: Your Options as a Wronged Investor

When securities investors suffer losses on brokered accounts, they sometimes feel that the negligent or otherwise deficient decisions of the brokerage are to blame. 

Disputes between securities investors and brokerage firms are common. Fortunately, the Financial industry Regulatory Authority (FINRA) offers investors the opportunity to recover damages (either money or securities) through the dispute resolution process. 

Arbitration, in which a neutral third party is selected to resolve a dispute, is one of the most commonly used forms of settling between two parties. 

The other major option for investors looking to recoup their losses is the mediation process, which stands out for a few key differences to arbitration. 

Although formal litigation in court is an option for some plaintiffs, the opportunity to sue for security-related disputes is realistically unavailable to most investors due to contractual language that compels arbitration. These terms are typically agreed to by the account holder upon opening their account. Because of this, arbitration—and sometimes mediation—are the two most common types of dispute resolution. 

Arbitration precludes the possibility of relitigating the dispute in court. FINRA arbitrators or arbitration panels study all relevant evidence, in addition to hearing arguments from both sides, before making a binding decision. 

You can contact an investment loss attorney to learn if your case could be arbitration eligible. 

FINRA Mediation 

FINRA mediation differs from arbitration in a few key ways. For starters, it is an informal process that can be started before or during the arbitration process between the two parties. 

In a mediation, an impartial mediator tries to help the two parties resolve the dispute via the settlement process. The mediator’s job is to interface between the two parties in the hope of finding a mutually satisfactory resolution. 

Another key difference between arbitration and mediation is that mediated decisions are not binding. Rather, a mediated resolution to a dispute remains unofficial until the two parties sign an official agreement. Because of this, either party can back out of the mediation process at any time without consequences—a distinguishing feature that notably separates mediation from arbitration. 

Contact an Investment Loss Lawyer Now

Are you looking to recover damages that you suffered due to the negligent actions of a broker or brokerage firm? Look no further than Wolper Law Firm, P.A. for help resolving your dispute

Call us at 800.931.8452 or fill out the form at the bottom of this page to schedule a consultation.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]