Navigating
through FINRA
Arbitration
and Simplified Arbitration, Step by Step
If you have ever had a brokerage account, you most
likely signed a form that stated that any and all disputes must be handled
through arbitration rather than in the courts. To put your legal rights into
good use, you must take action quickly or you may lose the right to seek
mediation or recover funds.
Time restrictions, also known as “statutes of limitations,” vary from state to state.
In some states, federal securities laws generally
require that you bring a court action within two years of the date that you
should have reasonably discovered the wrongdoing, but no later than five years
from the date the wrongdoing actually occurred. These precise laws can often
make it hard for you to reap your rewards so make sure you are knowledgeable
about your state’s regulations. Arbitrators look to either a federal or state
statute of limitations, depending on whether your claim is a violation of
federal or state law. In many states, you cannot pursue an issue through
arbitration if it is more than six years old.
In
the simplest of terms, arbitration is a form of dispute resolution and
mediation that is governed by state and federal law. A third party will
determine a judicial dispute and the hearing may involve an individual
arbitrator, also known as a tribunal. Arbitrators are appointed three ways:
directly by the disputing parties, by existing tribunal members, or an external
party. The disputing parties forsake their power and allow the arbitrator to
decide the winner of the dispute.
Here
are some advantages of arbitration over court action:
· Arbitration can be heard
sooner, in most cases, than taking the case to court to be heard. The
arbitration hearing is also shorted in length, making the prep work easier to
work with.
· Unlike many other court
events, arbitration hearings are arranged by location and the time that best
suits the parties, witnesses and arbitrators. Meaning you’ll never have to
rearrange your schedule to make it to the court date. The procedures can also
be simplified or adjusted, according to the case.
· Arbitration hearings are
private and confidential, meaning that media and other public members aren’t
able to attend the hearing. The final decision of the arbitration is not public
knowledge either and is useful for those who don’t like to air their “dirty laundry.”
· Disputing parties can
choose a technical person as the arbitrator if the dispute is of a technical
nature so the evidence will be easier to understand.
At
the same time, here are some common drawbacks of arbitration:
· While the court fees are
often times minimal, one or both parties will pay for the arbitrator’s
services, which can sometimes come with a large price tag. The maximum fee for
arbitration can reach 10 percent of the claim.
· Unless there is clear
evidence that the arbitrator was biased or there was fraud or corruption during
the case, the award decided upon in arbitration is binding and usually not
appealable. This is the worst case scenario if the arbitrator makes a mistake. If
you want to challenge an arbitrator’s decision, you must do so within three
months or less in a “motion to vacate.”
written by Bradford Richdale
copyright Brad Richdale TM 2010 all rights reserved
written by Bradford Richdale
copyright Brad Richdale TM 2010 all rights reserved
