Dispute Resolution
Process
Business in the securities industry for the most part is conducted fairly, efficiently, and
in a manner that satisfies everyone involved. Occasionally, however, disputes or problems arise. For example, you may disagree
with how your broker handled a transaction. If you cannot resolve the matter yourself, there are effective alternative dispute
resolution mechanisms, which usually result in a swift conclusion without the inconvenience and expense of a court "battle."
Dispute resolution methods, including
mediation and arbitration, are non-judicial processes for settling disputes between two or more parties. In mediation, an
impartial person, called a mediator, assists the parties in reaching their own solution by helping to diffuse emotions and
keeping the parties focused on the issues. In arbitration, an impartial judge, called an arbitrator, hears all sides of the
issue, studies the evidence, and then decides how the matter should be resolved. The arbitrator's decision is final.
Despite precautions taken to invest
safely and intelligently, it is still possible for a dispute to occur. Mediation and arbitration are important methods of
dispute resolution that have been used successfully by the securities industry and others, but they generally should not be
your first steps. Whether it is a discrepancy that has just arisen, or a disagreement that has escalated into a full-fledged
dispute, the first course of action should be to report the matter to your broker's manager. Often, management has the authority
and insight to take steps that will rectify the problem quickly and easily. If it is just a misunderstanding, management intervention
may be enough to put the transaction back on course.
If the brokerage firm's management does not resolve the complaint within a reasonable period,
you may want to seek legal advice. Even if you choose arbitration and/or mediation over a lawsuit to resolve the dispute, an attorney can provide you with
valuable instruction and advice, and can help weigh the advantages and disadvantages of each method. Although not required,
you have the right to have an attorney in mediation and arbitration. Keep in mind that in most cases, an experienced attorney
will represent the brokerage firm.
Mediation
Before entering into arbitration or litigation, consider mediation--a natural first step in the dispute resolution
process. Mediation is an informal process in which a trained and impartial mediator facilitates negotiations between disputing
parties, helping them to find their own mutually acceptable resolution. What distinguishes mediation from other forms of dispute
resolution--principally, arbitration and litigation--is that the mediator does not impose the solution, but rather, helps
make it possible for you and the other party to form and accept a solution yourselves.
Mediation is not structured rigidly. The actual process
varies from case to case, depending largely on the mediator's "style" and the frames of mind of those involved.
In some cases, you and the other party might meet to discuss the issues face-to-face, with the mediator there to help you
remain focused and calm. In other cases, the mediator might hold private caucuses with each of you separately,
and would then carry messages--offers, counter offers, questions, demands, and proposals--back and forth between you. Often,
the mediation process consists of a combination of both methods, plus any other technique the mediator feels is useful in
moving the negotiation forward.
The mediator's role is to guide you and the other party toward your own solution by helping you to define the issues
clearly and understand each other's position. Unlike an arbitrator or a judge, the mediator has no authority to decide the
settlement or even compel you to settle. The mediator's "key to success" is to focus everyone involved on the real
issues of settling--or the consequences of not settling. While the mediator may referee the negotiations--defining the terms
and rules of where, when, and how negotiations will occur--he or she never determines the outcome of the settlement itself.
The mediator also serves as an agent
and mirror of reality. With the help of the mediator, disputants often see things they initially did not want to see (like
the weaknesses of their own case and the strengths of the other party's case) or they get a clearer view of matters previously
distorted by anger and emotion. Since securities industry mediators are knowledgeable in the areas of controversy, they can
often give each side an expert, but unbiased, view of the strengths and weaknesses of the case overall.
Historically, business disputes submitted
to professional mediation services have had a settlement rate of about 80 percent. Mediation experts attribute this to the
parties' complete control over the process, costs, and outcome. If you feel good about the process, you will likely approach
it with enthusiasm and good intentions. Approximately eight out of ten cases settle within a few weeks to a few months of
the formal agreement to mediate--when everyone approaches the mediation table in earnest.
You may consider mediation successful even when the dispute
does not settle fully in the mediation process. Sometimes parts of a dispute settle in mediation, leaving fewer or less severe
differences to be settled in arbitration or litigation--translating into huge savings of time and money for everyone involved.
Generally, the mediation process improves communications, helps to narrow the issues involved, clears up misunderstandings,
diffuses emotion, and defines areas of agreement so that future dispute resolution efforts, especially in arbitration, can
become more efficient, effective, and more likely to produce settlement down the road.
Arbitration
When it seems that other efforts to resolve your dispute are not working, it is then time to decide whether you will
file a claim to arbitrate. Even if you choose, or are required to use, arbitration rather than a lawsuit as a means of resolving
your dispute, you should consider hiring an attorney who will provide valuable instruction and advice.
Arbitrators are people from all walks
of life and all parts of the country. After being trained and approved, they serve as arbitrators when selected to hear a
case. Some arbitrators work in the securities industry; others may be teachers, homemakers, investors, business people, medical
professionals, or lawyers. What is most important is that arbitrators are impartial to the particular case and sufficiently
knowledgeable in the area of controversy. Potential arbitrators submit personal profiles to FINRA; the profiles detail their
knowledge of the securities industry and investment concerns. If accepted, their names and backgrounds go into a pool from
which arbitrators are selected for any given case. Arbitrators do not work for FINRA, though they receive an honorarium from
FINRA in recognition of their service.
http://www.finra.org/ArbitrationMediation/Parties/Overview/OverviewOfDisputeResolutionProcess/
Our law offices provide the following services:
- Representation in FINRA arbitrations and mediations and related state and federal court proceedings such as petitions to confirm or vacate arbitration
awards.
