Understanding Securities Law Mediation vs. Arbitration

When a dispute arises among investors, brokers, or brokerage firms, there are a few options for successfully resolving the matter. Should an investor request mediation or file for arbitration through the Financial industry Regulatory Authority (FINRA), the broker may wonder what steps they should take to ensure that their rights are protected throughout the process. When it comes to securities law dispute resolution matters, mediation and arbitration are the two major ways to achieve a resolution. Let’s take a look at how these processes differ and what you can expect from each process.

Securities Law Arbitration

When an investor wants to recover financial damages, including money or securities, they may file for arbitration against a brokerage firm or an individual broker. Arbitration tends to be less costly than litigation, and outcomes are typically achieved more quickly and efficiently. The disputing parties select a neutral third party to serve as the arbitrator. Then it is the arbitrator who decides the final outcome, known as the award, which is legally binding. The arbitration process allows both parties to present their arguments and submit evidence for the arbitrator to examine and inform their decision.

The Mediation Process For FINRA Disputes

While arbitration is similar to litigation in that the ultimate decision lies in the hands of an outside authority, mediation provides an alternative method of resolving a dispute that allows the parties to negotiate a workable solution on their own. In the presence of a neutral mediator, the disputing parties are encouraged to collaborate and negotiate a fair outcome. Unlike arbitration, mediation does not impose an award—it’s up to the parties to reach a settlement together. Although FINRA does not require disputing parties to participate in mediation, many cases find success through this process. Mediation is a voluntary process, and the parties can decide to move to arbitration at any time if they feel that such a decision would better suit their needs. However, most of those who participate in mediation find success; FINRA reports that more than 80 percent of mediations result in a settlement.

Learn About Your Legal Options Today

Investors who file complaints against brokers or brokerage firms may do so by visiting FINRA’s Investor Complaint Center. However, damages cannot be claimed through the complaint center. Conversely, if the investor wants to pursue economic damages, filing an arbitration or requesting mediation is the primary means to do so. Whether you are facing mediation or arbitration, it’s a good idea to discuss your situation with a knowledgeable securities law attorney who can provide you with customized and effective legal guidance.

To discuss your case with a knowledgeable securities law attorney, call the Boomfield, Colorado office of Judex Law LLC today at (303) 523-4022 today.

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