Arbitration and mediation through FINRA


If your investment broker has stolen money from you somehow, your first step may be filing a complaint. FINRA oversees conduct within the securities industry, and it has a robust system for investigating complaints against its members, who include brokerage firms and other entities in the industry.

However, even if you have filed a complaint and FINRA has taken action, you still don’t necessarily get any of your money back. For that to happen, you may need to take legal action against the broker. This could mean going to court, but going to court is expensive and time-consuming.

Instead of going to court, many investors choose to resolve their disputes through alternative dispute resolution methods. In addition to its complaints process, FINRA also has a large dispute resolution system that relies heavily on arbitration and mediation.

In this blog post, we will explain the differences between these two methods, as well as some of their advantages and disadvantages.


Arbitration is, in some ways, like a less-formal version of going to trial. The parties argue their cases, and a neutral third party acts as the arbitrator to decide how the dispute should be resolved.

Before entering arbitration, the opposing parties typically agree to abide by the arbitrator’s decision. This means they draw up a contract in which they agree to the terms of the arbitrator’s decision.


Unlike arbitration, no outsider is making the decisions in mediation. Instead, a neutral third party, known as the mediator, serves to facilitate the discussion between the parties, with the goal of helping them reach a resolution.

If the parties reach a resolution, they draft a settlement agreement. This agreement becomes a binding contract between the parties.

Advantages and disadvantages

One of the primary advantages of these alternative dispute resolution methods is that, compared to going to court, they typically wrap up a dispute much more quickly and less expensively.

For some parties, another advantage is that these methods, unlike a courtroom trial, do not become matters of public record. The parties can keep the details of their dispute private.

However, for some investors, this privacy can be a disadvantage. Because their dispute will stay private, they can’t use their story as a warning to others, and courts can’t rely upon their case as precedent.

Before taking legal action, discussing options with an experienced attorney is a good idea.