Investor Choice in Financial Dispute Resolution

Mandatory Arbitration for Securities Disputes

If you have your money invested at a US brokerage firm, chances are you entered into what’s called a “binding arbitration agreement” when you opened your investment account. If you don’t remember signing any documents about this, that’s ok - hardly anyone does. Plus, brokers generally don’t direct your attention to this agreement, let alone explain what it really means for you.

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Here’s what it really means: If as an investor you ever lose money as a result of broker misconduct or investment fraud, you will be forced to bring your claim for restitution not in a court of law but through the financial industry’s arbitration process, which is run by the Financial Industry Regulatory Authority (FINRA), an extension of the Securities and Exchange Commission (SEC). You might be thinking - Ok, but what’s the big deal? How different can arbitration be from civil litigation anyway? Both venues are meant to resolve claims, right?

FINRA Arbitration Is Not Like Civil Court

It’s a big deal. For one thing, the FINRA arbitration forum is financially supported by the same firms your claim will be against. For another, in the FINRA forum your claim will very likely be decided by a panel of former financial industry professionals, most of whom have previously worked for the same firms your claim will be against. Compare that to a court case in which the outcome of your claim will be decided by a jury of your peers. Now maybe you see why binding arbitration agreements matter, and why investor advocates have been trying for years to get legislation passed that gives investors the choice between arbitration and civil trials.

PIABA Supports The Investor Choice Act

PIABA, or The Public Investors Arbitration Bar Association, is one such advocacy group. Recently, they issued a press release about some exciting new legislation that might finally give investors the right to choice their resolution venue in financial disputes. Thanks to Democratic Representative from Minnesota, Keith Ellison, “The Investor Choice Act” has been introduced to Congress. The act would ensure that mandatory arbitration agreements are prohibited under US securities laws. As investor advocates ourselves, we support your right to choose, once the facts of your dispute have emerged, the venue most advantageous to you.

If you or anyone you know has been the victim of broker misconduct or investment fraud, please contact our securities attorneys for a free consultation toll-free at 1-855-462-3330 or via email by clicking here.