Securities arbitration lawyer Robert W. Pearce, a Florida based securities lawyer with a practice that is primarily representing investors in FINRA arbitrations against broker dealers and advisors, answers one of the more frequently asked questions: Why do I have to go to FINRA arbitration to resolve my stockbroker dispute?
My name is Robert Pearce and the short answer to your question is that you probably signed a contract with an arbitration provision. These days virtually every customer agreement at a brokerage firm has a arbitration provision at the end of the contract. It’s in bold and it’s binding and it’s final, and judges will enforce it, you will be required to go to an arbitration.
When I started in the early 1980s there were loopholes and ways that you could get around these FINRA arbitration agreements. Beginning in 1983, as a court dockets started to get more and more crowded, the judges started to close the loopholes. And by 1988 the United States Supreme Court had closed all the loopholes and made arbitration final and binding on all investors, and anybody else that signed an arbitration contract for that matter.
It’s true, in arbitration you don’t have all the rights that you might have in a trial. You don’t have a right to jury trial; you don’t have a trial by your peers. And there is limited discovery in arbitration. For example, there are no depositions. You have limited appellate rights. You can appeal an arbitration, but the award is generally final and binding unless you can prove that: there was some fraud or corruption in the process; the arbitrator didn’t give you a postponement when you deserved it; the arbitrator has exhibited evident partiality; or they refuse to follow the law, the term is “manifestly disregarded the law.”
But there are benefits to arbitration. The number one benefit is you have experienced arbitrators that are knowledgeable of the issues in these type of cases that a jury might not understand and appreciate the nuances of in court. You can have a decision much quicker in arbitration than you can in court these days. The expenses are less.
With an attorney that is experienced in FINRA arbitrations, who is knowledgeable of not only of the securities laws but of FINRA rules and procedures and standards governing stockbrokers, and experience with the nuances of the arbitration process, you can be successful and recover all of your damages, if not a substantial amount of them. There are no limitations to the type of remedies that are available in arbitration. You can get rescission, you can get compensatory damages, you can get punitive damages, you can get attorney’s fees, you can get interest, you can be made whole with the right attorney.