FINRA Dispute Resolution Guidelines
A general guideline to determine the best course of action in a FINRA Arbitration proceeding.
Consider Hiring an AttorneyThe process of FINRA Arbitration is governed by FINRA Rule 12000 for Customer Disputes and Rule 13000 for Industry Disputes; each of which is dozens of pages in their infinite wisdom. FINRA Arbitration can be tough because the issues can be so narrow and if presented incorrectly, could cost you a pretty penny. An attorney familiar with the FINRA Arbitration rules and procedures could help you significantly.
Determine Whether You Qualify for ArbitrationThe first thing to consider is whether you fall within the bounds of FINRA Arbitration under rule 12000 or 13000. Members, Associated Persons, and Customers must Arbitrate if there is a written arbitration agreement (usually when you open a new account), the dispute is between the Customer and a Member or Associated Person, and the dispute arises from a transaction in connection with related business activities.
Before You Initiate ArbitrationBefore initiating an arbitration or responding to a claim, ensure that you address certain preliminary Issues:
Is the claim Arbitrable? Certain claims, such as Class Actions or Shareholder Derivative Actions are not arbitrable under the Customer Code.
Is the claim time-barred? All claims must be brought within six years after occurrence.
Where is the evidence? Evidence should be gathered to build a viable case for presentment to the Arbitrator(s). It is always wise to ensure that the factual allegations in all pleadings are correct and are supported by proper documentation.
Commence the ArbitrationA claimant begins by filing a complaint with FINRA with three key items: submission agreement, statement of claim, and initial filing fee.
After FINRA determines that the claims are sufficient, it sends each respondent a claim notification letter stating that the claimant has named the respondent as a party in the arbitration.
Attend the Initial Pre-Hearing ConferenceAfter the panel is appointed, FINRA schedules an initial pre-hearing conference (IPHC) with the parties and arbitrator(s). The IPHC is usually held telephonically, on at least 20 days’ notice.
File Your MotionsEither party may file motions. The most common is the Motion to Dismiss, although the Customer Code discourages motions to dismiss a claim, in some instances a party move to dismiss before the case ends.
Attend the HearingA hearing must be held in any customer case unless:
• The case is a simplified arbitration and the customer does not request a hearing
• The case is a default proceeding
• The case is settled, withdrawn or dismissed before the hearing
• The parties agree otherwise
Find Out the ResultsThe panel strives to render the award within 30 business days from the date the record is closed. The award must be in writing and signed by a majority of the arbitrators or as required by applicable law. Unless the applicable law directs otherwise, an award rendered under the Customer Code is final and not subject to review or appeal.