Posts Tagged ‘ FINRA ’

Mandatory Arbitration Lacks Sexiness of Gekko’s Greed Speech, but…

September 29th, 2010. By Kristine B

With Wall Street: Money Never Sleeps just out, you can’t think about securities fraud and financial wrongdoing without thinking about Gordon Gekko and his classic line about greed (it’s good)…but let’s step back from fantasy and consider a bit of reality…

So you’ve invested some money and now you’re concerned that you got some bad financial advice. Or you’re concerned that your financial advisor failed to follow your advice, churned your account or invested your money in stocks that weren’t appropriate for you. Your initial instinct might be to say, “Let’s sue the guy!” but in reality, what you have to say is the less succinct but more realistic, “Let’s file a FINRA arbitration against the guy!” It’s screenplay dialog just waiting to happen, no?

So just what is FINRA arbitration you ask? Well, it’s today’s Pleading Ignorance topic, so here goes… 

Here’s the thing, and it’s the most important thing you need to know. When you signed a contract with your brokerage firm, you almost definitely agreed to a clause regarding mandatory arbitration. This means that if you have a dispute with your broker or brokerage firm, you have to file an arbitration—you can’t file a lawsuit (except in certain conditions, such as in a class action). 

FINRA is the Financial Industry Regulatory Authority and it basically oversees the financial industry (hence the name). Its members have to agree to mandatory, binding arbitration to resolve disputes. So that means that if you have a complaint against your financial advisor or brokerage firm, you file an arbitration. 

Although it sounds like a downer—you don’t often hear about multimillion dollar awards in arbitration cases—there are some very good points to mandatory, binding arbitration:

1. Arbitration often takes less time than a lawsuit. Lawsuits, from the date the lawsuit is Read the rest of this entry »

Tags: FINRA, Mandatory Arbitration, Pleading Ignorance
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