FINRA Mediation: A Guide For Investors

If you have a complaint against your broker or your brokerage firm, you will likely be required to pursue compensation through the FINRA arbitration process. When you signed up to work with your financial advisor or brokerage firm, you probably signed a customer agreement that mandates arbitration as the proper dispute resolution method.

However, even if you did sign a customer agreement that included a mandatory arbitration clause, you may still have another other option available. Specifically, the Financial Industry Regulatory Authority offers mediation as a flexible alternative to arbitration. In many cases, meditation leads to successful settlements. Indeed, FINRA reports that nearly 80 percent of cases that go before a mediator are successfully settled during the mediation.

At Sonn Law Group, our law firm is dedicated to advocating for investors. We want all investors to have the knowledge and tools they need to protect their legal rights and financial interests. Here, our investment fraud lawyers have put together a comprehensive guide to the FINRA mediation process.


Six Things You Need to Know About FINRA Mediation


  1. Mediation is Non-Binding and Fully Voluntary

The first thing that all investors need to know about FINRA mediation is that the process is fully voluntary and non-binding. The Financial Industry Regulatory Authority will not require you or your broker to participate in mediation. Further, should parties agree to enter mediation, neither you nor your broker will be required to reach a settlement. Unless the parties signed a customer agreement that states otherwise, both brokers and investors have the legal right to decline to participate in a FINRA mediation.

While mediation can help to facilitate more efficient dispute resolution in many cases, there are also circumstances in which mediation will simply not be useful. If you have a legal claim against your broker, but your broker is not cooperating, you may be better off simply pursuing arbitration from the beginning of the process. Ultimately, investors should always consult with an experienced FINRA mediation attorney who can help them determine whether or not pursuing mediation makes sense in their individual case.


  1. You Can Start With Mediation or Request Referral to Mediation

Under FINRA rules, parties to a securities dispute can attempt to initiate mediation at any point in time. Initiating mediation is done through filing the Request for Mediation form with FINRA. If all parties to the dispute agree to mediate, then the mediation process can move forward. To be clear, this means that investors can start their case by seeking mediation.

You have the right to mediate a dispute without ever actually filing a formal claim for FINRA arbitration. Additionally, you can file a Request for Mediation if your claim is still pending in arbitration. To do so, you will need to consult with your arbitration administrator and obtain a referral for mediation.


  1. FINRA Will Help to Facilitate Mediator Selection

For mediation to be successful, parties must be able to find the right mediator to handle their case. FINRA helps to facilitate the mediator selection process. Parties to the dispute will get access to a list of proposed mediators.

This list will provide some basic background information about the mediators, from location and price to past experience handling similar claims. With this information, parties can pick a mediator that has the right skills and experience for their claim. Additionally, if the parties have an outside mediator (one that is not listed on the FINRA roster) they may still be able to use that mediator by filing a joint request with the agency.


  1. Mediation Sessions are Flexible

Mediation sessions are designed to be flexible. They can take place in person, by phone, or by video conference. The parties to the dispute are given considerable flexibility to find the mutually agreeable arrangement that they believe will be best to facilitate a resolution.

Investors should never go into a FINRA mediation session alone. The financial advisor or brokerage firm will be represented by legal counsel. As an investor in mediation, you should be represented by a qualified securities fraud attorney.

Once mediation starts, the process can take many different paths. The mediator may conduct the entire process through a joint session, or private caucuses may be used for all or part of the session. This will vary based on the flow of the mediation. Mediation sessions can last for as long as progress towards an agreement is still being made by the parties.


  1. Your Mediation Will End With a ‘Settlement’ or an ‘Impasse’

There are two ways for mediation to end: with a settlement or in an impasse. A settlement occurs when the parties have successfully resolved all aspects of their dispute. Though, as mediation is non-binding, the parties are not required to reach a settlement.

If a settlement agreement is signed during or after the mediation, then it will be considered final and fully enforceable. If your mediation ends with an impasse, it means that, for whatever reason, a settlement could not be reached on all issues. Your claim can still move forward in the legal process.


  1. Mediating Your Claim Does Not Eliminate Your Right to Seek Arbitration

One of the biggest benefits of FINRA mediation is that going through it will not foreclose any of your other available options. FINRA mediation is a tool that can be used to move towards a successful settlement. If you seek mediation, but you are unable to settle your claim, you can still take your case before a FINRA arbitration panel. Further, you can still informally settle your claim with your broker at another point in time.


Contact Our FINRA Mediation Attorneys Today

At Sonn Law Group, our top-rated securities fraud attorneys have extensive experience representing investors during FINRA mediation. If you considering filing a complaint against your broker or brokerage firm, we can help. Please contact us today to get your free claim evaluation. We handle all investment fraud cases using contingency fee agreements. That means we only get paid if we win or settle your case.