About the Arbitration Procedure
what we do for you
We begin by having a professional compute the actual losses which you have sustained in your brokerage account. Next, we evaluate those losses by considering: (1) the prevailing market conditions at the time you were sustaining losses; (2) the activity in your account and the commissions charged by the brokerage firm; (3) the pattern of trading in the account; (4) whether the securities were recommended by the broker, and (5) whether the investments were suitable for your portfolio.
the process - not a lawsuit but arbitration
If you have suffered a significant investment loss because of some misconduct on the part of the broker, the next step is determining where to seek a recovery. Most brokerage firms require their customers when opening a new account to sign a pre-dispute arbitration agreement whereby the customer agrees to submit to arbitration, generally through the Financial Industry Regulatory Authority (FINRA), which was formerly known as NASD. If there is such a pre-dispute arbitration agreement, it will usually be enforced by the courts, so there may not be a choice of forums.
If you would like to learn more about the process and whether your loss is worth pursuing, contact us and let us help you make sense of what happened to your portfolio.
pros and cons of arbitration
There are some advantages to arbitration, but there are also some disadvantages. Some of them are listed below:
- Substantial reduction in cost of obtaining a decision because of the lack of formal pleading rules, simplified arbitration rules, the absence of most pretrial motions, and simplified discovery, simplified rules.
- Prompt payment of arbitration awards because the rules of FINRA (formerly known as NASD) require prompt payment or, in the event payment is not promptly made, FINRA can take action against broker-dealer or broker.
- The grounds for setting aside an arbitration award are extremely narrow. As a result, costly appeals are usually unnecessary.
- In arbitrations before FINRA (formerly known as NASD), a panel of three arbitrators typically will hear the case. Usually, two of the panel members are public members, such as lawyers, accountants, or other professionals who have been trained as arbitrators by FINRA. As a result, it is often easier to present cases involving industry practices or complex damages models to an arbitration panel than to a jury.
- In court, you have the right to conduct depositions and much more extensive documentary discovery than in most arbitrations.
- In court, you have the right to have your case decided in accordance with law, and you can appeal a judgment that you think is contrary to law.
- In court you have the right to a jury trial, which in some cases would be advantageous.