The basics of securities arbitration


When an investor finds themselves in a dispute with their broker or investment advisor, they may wonder what their options are. One option is arbitration which may not be as involved as the court process. It is worth considering as an option to help resolve investment-related concerns.

The basics of securities arbitration

Securities arbitration can help resolve disputes as they come up between investors and their broker or investment advisor. The securities arbitration process is similar to the court process but is decided by an arbitration panel rather than a jury. Most all securities arbitration claims and disputes are filed with FINRA.

Investors who are seeking recovery of investment losses that were caused by a brokerage firm or stockbroker’s misconduct may be able to benefit from the securities arbitration process. Securities arbitration is a common way to resolve investment-related disputes. In general, securities arbitration may only be used as an alternative to litigation if the parties agree to the arbitration process or they have a contract requiring them to arbitrate.

Types of disputes that may be subject to securities arbitration can include claims of:

  • Churning
  • Unsuitability
  • Negligence
  • Misappropriation
  • Material misrepresentation or omission
  • Failure to diversify
  • Unauthorized trading
  • Breach of fiduciary duty

It may be possible to recover investment losses when they resulted from some type of broker or investment advisor misconduct. Prior to arbitration, it may be possible to settle the claim or successfully mediate the claim.

Because the securities arbitration process can be helpful for resolving securities disputes, it is useful for investors negatively impacted by securities fraud or other misconduct to be familiar with the process.