Securities Arbitration

Securities arbitration is an alternative way to resolve a claim of fraud or negligence against a stock broker or brokerage firm.  Unlike a case tried in a courtroom, an arbitration case is private, not public. 

In most cases both parties must agree to this alternative process.  In fact, without knowing it, you may have already agreed to this process, due to the various contracts and agreements most stock brokers or brokerage firms require their customers to sign. Most of these contracts have language regarding mandatory arbitration of claims.

Initially, a Statement of Claim is filed, outlining the allegations of the brokers misconduct then, the brokerage firm has 45 days to file its “Answer” to the Statement of Claim.  If the parties are unable to resolve their dispute through a settlement agreement, then the case is brought before the arbitration panel for hearing and decision. 

The case is typically heard in a hotel conference room and is decided by a panel of three impartial individuals familiar with such securities issues.  The panel normally consists of securities experts and related professionals like lawyers or accountants. There are no depositions involved in arbitrations, and the discovery process (exchange of documents and information) is limited compared to what occurs in a courtroom.

Regardless, most arbitrations generally use lawsuit-like rules and procedures to resolve claims, though the process usually does not last as long as courtroom trial.  Arbitration hearings generally last between 2 to 5 days depending on the facts of the particular case.  If the panel issues an award, the brokerage firm, pursuant to NASD rules, is required to make payment in full within 30 days of the award.

Learn more about Securities Litigation:

>  Why SimmonsCooper?

>  Do You Have a Securities Case?

>  Filing a Lawsuit