Arbitration is a form of alternative dispute resolution that is often used in the place of traditional litigation. In the securities industry, most complaints against brokers and brokerage firms are handled through the arbitration process set up by the Financial Industry Regulatory Authority (FINRA).
This is because most investors are required to sign a customer agreement with their brokerage firm that contains a mandatory arbitration provision.
If you have a complaint against your brokerage firm, it is imperative that you hire a skilled FINRA arbitration attorney. You need to be able to recover the maximum available award so that you can receive fair compensation for your illegitimate investment losses.
Here, our securities arbitration lawyers explain the most important things that you need to know about FINRA arbitration awards.
Understanding the Elements of a FINRA Arbitration Award
You will find out whether or not you are entitled to an award soon after the conclusion of your FINRA arbitration hearing. Specifically, the final decision in your case should be issued no later than 30 business days after the conclusion of your hearing. All FINRA awards are sent out in writing.
Additionally, beyond you and your broker receiving a copy of the decision, it will also be posted publicly through FINRA’s Arbitration Awards Online database.
In the official document that you receive, the following information will be included:
- Your name and contact information;
- Your broker’s name and contact information;
- The dates covered by your claim;
- The location of the hearing;
- The underlying causes of action that you asserted against your broker;
- The types of financial products that were involved in the case;
- The amount of financial compensation that you requested;
- The amount of financial compensation that you were actually granted;
- An allocation of all forum fees and legal fees; and
- The signatures of the arbitrators.
Notably, unlike in a traditional court case, a FINRA arbitrator is not required to write a whole opinion explaining their decision. In fact, FINRA arbitrators are not required to provide any sort of explanation for their decision.
How Can I Collect My FINRA Arbitration Award?
If you are granted an award, it should be paid to you without any undue delay. Under FINRA’s industry rules, registered brokers have 30 days to take action after an award is granted. At this point, brokers have three basic options:
- They can pay you the full amount that you were awarded.
- They can attempt to work out an acceptable payment plan with you.
- The can file a motion to vacate the arbitration award in district court.
The broker cannot simply refuse to take action. If the broker has failed to pay you or take further legal action within 30 days, you should consult with your investment fraud lawyer. Your lawyer can inform FINRA, and additional enforcement action will be taken against the broker.
Under FINRA Rule 9554, brokerage firms that fail to comply with the terms of an arbitration award or any related settlement will be immediately suspended from the securities industry.
Understanding Your Right to File an Appeal
One of the most important things you should know about FINRA arbitration awards is that they are difficult to get overturned. Your right to appeal the decision of a FINRA arbitration panel is extremely limited. Likewise, your broker or brokerage firm also has limited rights to challenge the validity of a FINRA arbitration award.
It is best to think of the FINRA arbitration process as both binding and final. FINRA has no internal appeals process. While parties to a FINRA arbitration hearing can typically file a limited appeal in district court, these courts will not review the general merits of the arbitration decision.
Instead, the district court judge will only review your case for clear evidence of an unfair process. Specifically, courts can review FINRA arbitration decisions for evidence of:
- Corruption;
- Fraud;
- Obvious bias;
- Clear misconduct; or
- Extreme irrationality.
Make no mistake, these are all very high bars to clear. As a general rule, a district court judge does not want to interfere with a FINRA arbitrator’s decision. This is one reason why it is so important to be fully prepared at beginning of the arbitration process.
Simply put, in the overwhelming majority of cases, the FINRA arbitration panel’s decision is the final word on the issue.
Should I Try to Settle My Claim With My Brokerage Firm?
You want to settle your complaint without going through the full FINRA arbitration process. This is normal: A large number of FINRA complaints are settled voluntarily by the two parties. In some cases, brokers and their customers are able to settle their dispute through direct negotiation.
In other cases, brokers and their customers go through FINRA’s voluntary mediation process. Further, you can settle your complaint at any point in the dispute resolution process. Some investors are able to settle their claim without ever filing an actual complaint. Other investors do not settle their case until the day before their FINRA arbitration hearing.
Ultimately, whether or not it makes sense to settle your specific complaint will depend on a wide array of factors. Your case should be reviewed by an experienced broker negligence attorney. If you are considering entering into negotiations with your broker, it is strongly recommended that you seek assistance from a qualified legal representative.
Your attorney will be able to help you assess the strength of your case, as well as the viability of securities mediation and securities arbitration.
Contact Our Top-Rated FINRA Arbitration Lawyers Today
If you have a claim against your broker or brokerage firm, our investor protection team is standing by, ready to help. At Sonn Law Group, our securities arbitration attorneys have helped many investors recover the full financial compensation that they rightfully deserve.
To request your free, fully confidential initial legal consultation, please contact our team today. Our law firm takes on all FINRA arbitration claims on a contingency fee basis. We do not collect our legal fees unless we get you a FINRA arbitration award or successfully settle your case.
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