Alternative dispute resolution options for securities disputes


When parties have a dispute over securities, going to court is not always the first option to take. Many parties in New York choose to attempt to resolve their differences through alternative dispute resolution methods including mediation and arbitration.

SEC Rule 12 allows for arbitration of disputes arising from the securities of business of the parties. Many account agreements have arbitration clauses. In this post, we will take a closer look at these techniques.


Mediation is a form of alternative dispute resolution overseen by a neutral third party. Unlike a judge, the mediator is not a decision-maker. Instead, the mediator helps facilitate discussions between the two parties so that they can reach an out-of-court settlement. Mediation is informal, but parties can be represented by attorneys.

Mediation is generally less expensive and quicker than litigation. Additionally, discussions in mediation remain confidential.


Arbitration is more formal than mediation but less formal than a trial. Arbitration is overseen by an arbitrator, who acts something like a judge.

Unlike mediators, arbitrators are decision makers. If you elect to resolve your dispute through binding arbitration, you are generally obligated to follow the arbitrator’s decision except in very narrow circumstances. If you elect non-binding arbitration, you could potentially take the arbitrator’s decision to court.

Through arbitration, each party will pursue discovery and present an argument and evidence in a hearing. However, the rules of arbitration are generally more flexible than those of a trial. Each party to the arbitration proceedings can be represented by an attorney.

Is alternative dispute resolution right for you?

Ultimately, those who have been defrauded or who have been sold investments that are unsuitable for them will want to consider all their dispute resolution options, including mediation and arbitration.

Sometimes, these remedies allow for a quicker, less expensive resolution that is acceptable to all sides. Other times traditional litigation is more appropriate. Parties to securities disputes will want to make sure they explore all their rights and options so they can make decisions that are in their best interests.