FINRA Arbitration Process
This guide contains general information about FINRA and the arbitration process. Arbitration utilizes neutral individuals who serve as decision-makers after weighing the facts of each case presented. An arbitration award is final and binding and precludes you from pursuing the same claims in court.
File A ClaimThe arbitration process begins with a party filing a Statement of Claim ("SOC") with FINRA. The party filing the SOC is called the Claimant. The party against whom the SOC is filed is called the Repondent. The SOC provides details of the dispute, including the dates, names of persons and entities involved and well as the relief requested. The SOC may be filed online or through the New York Office located at:
The Office of Dispute Resolution
One Liberty Plaza
New York, New York, 10006
Answer A ClaimAn Answer is the Respondent's responses and defenses to the SOC. The Respondent must file the Answer within 45 days of receipt of the SOC. When responding, the Respondent must serve each Claimant and Respondent with a copy of the Answer and signed Submission Agreement. FINRA must also receive copies.
Arbitrator SelectionFINRA randomly generates lists of arbitrators from its arbitrator roster. The number of lists generated and the number of arbitrator names per list depends on the specific type of case.
In investor cases with claims up to $100,000, the parties receive one list of 10 arbitrators. Each party may strike up to four arbitrators on the list, and must rank the remaining arbitrators. In investor cases with claims over $100,000, the parties receive three lists- one with 10 arbitrators who will act as the chair of the arbitration panel, one with 15 public arbitrators and one with 10 non-public arbitrators. For the chair list, parties may strike up 4 arbitrators and rank the rest. For the public arbitrator list, parties may strike up to 6 arbitrators and then must rank the rest. Parties may strike all of the arbitrators in the non-public list if they wish to have an all public panel.
For disputes involving brokerage firms, parties will receive one list of 10 chair-qualified non-public arbitrators for claims up to $100,000, and two lists (one including the 10 chair-qualified non-public arbitrators and one including 20 non-public arbitrators) for claims over $100,000 or unspecified amounts.
For disputes involving brokerage firms and brokers, parties will receive one list of 10 chair-qualified non-public arbitrators for claims up to $100,000, and three lists (one including the 10 chair-qualified public arbitrators, one with 10 public arbitrators and one including 10 non-public arbitrators) for claims over $100,000 or unspecified amounts.
Prehearing ConferencesOnce a panel is appointed, FINRA schedules the initial prehearing conference. During the initial prehearing conference the parties and arbitrators meet to set the schedule. This is usually held by telephone. The Panel will determine dates for discovery deadlines, briefing and motion deadlines, the hearing and any other preliminary matters.
DiscoveryThe discovery process allows parties to obtain facts and information from other parties in the arbitration so that they may support their own case and prepare for the hearing. Parties are required to cooperate with each other to the fullest extent possible . FINRA's Discovery Guide contains guidelines to help parties and arbitrators during the discovery process.
Parties can object to a discovery request, file a motion to compel discovery and file a motion for subpoenas. If a party fails to produce documents or information required by a discovery order, the arbitrators may issue sanctions against that party.
HearingThe Director will determine which of FINRA's hearing locations will be the hearing location for the arbitration. Generally, the hearing location will be the one closest to the investor's residence (for cases involving investors) or where the associated person was employed (for cases involving industry professionals).
The hearing is recorded and functions much like a court case. There is testimony and evidence, direct and cross examination, motions, exhibits and closing statements.
Decision and AwardsAfter the hearing, the arbitration panel deliberates and decides what relief, if any, the Claimant is entitled to. Where the panel is made up of three arbitrators, the award is based on the vote of a majority of the arbitrators.
The panel will issue an award within 30 business days from the date the record is closed. All awards are final and are not subject to review or appeal, except under limited circumstances.