By Attorneys Serving Clients in FINRA, NFA, AAA, JAMS Arbitrations in Florida and Nationwide
Introduction
There are two primary alternative dispute resolution methods, arbitration and mediation. These are nonjudicial processes for settling disputes between two or more parties. In arbitration, an impartial judge, called an arbitrator, hears all sides of the issue, studies the evidence, and then decides how the matter should be resolved which is final. In mediation, an impartial person, called a mediator, assists the parties in reaching their own solution by helping to diffuse emotions and keeping the parties focused on the issues.
Whether you are an investor or broker, the odds are you have agreed in account opening or membership agreements to resolve any dispute with any stock or commodities brokerage firm in an arbitration forum outside of the courtroom such as the Financial Industry Regulatory Authority (FINRA), National Futures Association (NFA), American Arbitration Association (AAA) or the Judicial Arbitration and Mediation Services (JAMS) organizations in locations throughout the United States.
The majority of arbitration claims involving the securities industry are filed with the FINRA. The commodities industry disputes are generally processed in a similar manner and under the rules of the NFA. FINRA and the NFA provide dispute resolution services for its membership and other exchanges through contracted agreements.
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The arbitrations handled by the attorneys at The Law Offices of Robert Wayne Pearce, P.A. generally involve securities broker dealers who are members or individuals who are associate members of FINRA and so this explanation of arbitration will focus on FINRA arbitration proceedings. Attorney Pearce has arbitrated and mediated numerous FINRA disputes involving complex legal issues in his practice areas. To learn more about our arbitration and alternative dispute resolution services, contact us today to schedule a confidential consultation.
Arbitrators
The backbone of FINRA arbitration is its pool of arbitrators, one of the largest within the United States. They are people from all walks of life and all parts of the country. After being trained and approved, they serve as arbitrators when selected to hear a case. Some arbitrators work in the securities industry; others may be teachers, homemakers, investors, business people, medical professionals or lawyers. What is most important is that arbitrators are impartial to the particular case and sufficiently knowledgeable in the area of controversy.
Potential arbitrators submit personal profiles to FINRA; the profiles detail their knowledge of the securities industry and investment concerns. If accepted, their names and backgrounds go into a pool from which arbitrators are selected for any given case. Arbitrators do not work for FINRA, though they receive an honorarium from FINRA in recognition of their service.
The parties will select their arbitrator choice(s) from a computer-generated rotation list and disclosure information provided by FINRA. The parties may strike any or all arbitrators from the list. If they do not have any conflicts, any remaining arbitrators will be appointed to your case.
Filing a Claim
Arbitration starts with your Statement of Claim, a description of what happened. As your attorneys, we tell the story clearly, concisely, accurately, honestly, completely, and in sufficient detail so that someone reading it will understand what happened, the applicable law and what monetary damages you are seeking and why we feel you are entitled to receive a favorable Award.
FINRA charges a nonrefundable filing fee for handling the arbitration, and you must make a hearing session deposit. FINRA publishes the current fees and required deposits. The current initial filing fees in disputes initiated by customers and associated persons range from $50 to $1,800 for claims in excess of $1 million dollars. The current initial filing fees on disputes initiated by members range from $225 to $3,700 for claims in excess of $5 million dollars. In addition, members will be surcharged in all arbitrations in which they are a party in the range of $150 to $3,750 for disputes in excess of $10 million dollars.
Your claim is served by FINRA upon the respondent who is given time to provide an answer. After the respondent is served, both parties are then responsible for providing - or serving - copies of all other documents, pleadings, correspondence, etc., directly to the other parties and for providing additional copies of any documents to FINRA for its record and for the arbitrators.
Arbitration Hearings
If your claim is for $ $100,000 or less, it is considered a "small claim" and usually, a single public arbitrator will render a decision solely by reading the statements and supporting materials submitted by each party. However, as a public customer, you may request a hearing where you appear instead of having the decision made on reading the papers of the parties.
In cases where the claim is for more than $50,000, or if you or the arbitrator request a small claim hearing, the hearing will be scheduled approximately after one year the Statement of Claim is filed. The hearings are conducted in sessions of up to four hours, usually with two sessions per day, though not necessarily in successive days. It is not possible to determine exactly how many sessions it will take to hear your case. But the typical hearing takes three to four days.
It is our responsibility to prepare you for the arbitration hearing. We will arrange for any witnesses and/or evidence to be available for presentation at the hearing. We must inform the other party of the witnesses you will have and provide copies of anything we plan to use at the hearing as evidence at least 20 calendar days before the start of the hearing. We will also need to bring to the hearing enough copies of each item for each arbitrator and one for the files of FINRA. We will be well-organized and practiced what we want to say to the arbitrators. The case will be concise and well-focused, free from repetitive and irrelevant information.
The arbitrators conduct each hearing in the manner they think will be the most effective in permitting the full and fair presentation of the evidence and arguments of the parties. The process will usually go as follows:
- The arbitrators and the witnesses are sworn in.
- Each party has an opportunity to make a brief opening statement.
- The claimant presents facts to the arbitrators, including documents and live or written testimony.
- The respondent presents his or her case in the same manner as the claimant.
- Then, any counter claims are presented in the same way.
- Parties may provide rebuttal evidence.
- Parties may make closing statements or summations of the testimony.
We will be prepared to demonstrate proof of your claim. Our witnesses will be subject to cross-examination by the other party, and to questioning by the arbitrators. We will be able to cross-examine any witnesses for the other party. The parties are also able to object to any evidence presented by the other party before the arbitrators receive it. The arbitrators will examine the documents to determine if they will be admitted into evidence.
Decision and Awards
The decision is made after all parties complete their presentations and the arbitrators close the record. In cases where there is an arbitration panel, the outcome is based on agreement by a majority of the panel. Arbitrators will endeavor to make a final decision within 30 days after they close the record. They are not required to write opinions or provide reasons for their decision.
You will receive a written document called the "award" (i.e., the "decision") describing the determination of the arbitrators, usually by registered or certified mail, or by delivery in person. All parties are notified at the same time. Arbitration decisions are also made public. If you are the claimant and the decision or award is made in your favor, you can expect to be paid within 30 days of the time that the other party is notified of the decision. The other party will pay you directly, usually by sending you a check in the amount specified by the arbitrator. Brokers and FINRA member firms must pay arbitration awards within 30 days of receipt, unless a motion to vacate is filed in court.
Decisions made in FINRA arbitrations are final. Arbitrators cannot reconsider their decisions, once issued, even if new evidence surfaces later. You may certainly challenge the outcome of arbitration in a court of law, but these cases are successful only under rare circumstances. The courts generally uphold arbitration decisions.
Case Results
Most arbitration cases end with a settlement between the parties either through direct negotiation or through mediation. In recent years, parties agreed on a resolution in about 60 to 80 percent of all cases in mediation or privately negotiated settlements.
Schedule Your Free Initial Consultation With Attorneys Skilled in Handling FINRA, NFA, AAA and JAMS Arbitrations
Contact The Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida to discuss your arbitration claim. The firm can be reached by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail. We can also arrange a meeting with you at offices located in Boca Raton, Fort Lauderdale, Miami and West Palm Beach, Florida and elsewhere if we believe you have a viable case or defense.
