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What to Expect in Securities Arbitration

Posted: Sep 02, 2015 | Posted in:

The vast majority of disputes between individual investors and their brokers are handled through securities arbitration under the rules of the Financial Industry Regulatory Authority (FINRA).

Arbitration is a process that is somewhat similar to filing a lawsuit in court; however, there are far fewer formalities with arbitration and arbitrating a dispute typically takes far less time and resources than pursuing damages at trial. As a result, the fact that most broker disputes are required to be resolved through FINRA arbitration is generally seen as a benefit to individual investors.

Of course, the concept of pursuing compensation through securities arbitration still sounds daunting to the average investor. In this article, Zamansky LLC’s securities arbitration attorneys provide some insight into what to expect from the process.

FINRA Arbitration Statistics

If you are considering filing a claim against your broker, the first thing you should know is this: You are not alone. Investors file thousands of arbitration claims with FINRA every year. Brokers make mistakes and take advantage of their clients, and it is important for investors who suffer losses to take a stand and fight to hold their brokers accountable. According to FINRA:

  • Investors filed 3,822 arbitration claims in 2014. This was actually the third lowest total since 2000, though it was slightly higher than the total for 2013.
  • Since 2000, roughly 80,000 investors have filed arbitration claims with FINRA.
  • Investors have filed 955 arbitration claims through April 2015.
  • The six most common claims in FINRA arbitration are: breach of fiduciary duty, negligence, breach of contract, failure to supervise, misrepresentation, and unsuitability.
  • More arbitration claims involve common stock than any other type of security. Mutual funds are second, followed by options and annuities.

On average over the past five years, close to 80 percent of securities arbitration claims have actually been resolved prior to the arbitration hearing. Roughly 60 percent of claims settle privately or are resolved through mediation. When the arbitration panel has the final say, investors win approximately 40 percent of the time.

The Sooner You Get Started, the Better

As you can see, FINRA arbitration is an important tool for investors who have suffered unwarranted stock market losses. If you have suffered losses and believe your broker or investment advisor is to blame, we encourage you to take action quickly to enforce your rights. While FINRA’s arbitration guidelines give you six years from the date of loss to file your claim, if you wait to file, the delay can often work to your disadvantage. The sooner you act, the more your attorney can do to help recover your losses.

For more information, you can read, Knowing When it is Time to Hire an Attorney, or simply contact one of our securities arbitration attorneys for a consultation.

Speak with a Securities Arbitration Lawyer at Zamansky LLC

Zamansky LLC provides experienced representation for individual investors who have lost money due to broker negligence or misconduct. We represent clients across the country in securities arbitration. To discuss your case with one of our attorneys, call (212) 742-1414 or contact us online today.