New Arbitration Program vs. Going to CourtAugust 29, 2012 – Articles Law 360
The Financial Industry Regulatory Authority (FINRA) recently proposed a pilot program for customer-initiated arbitrations for claims involving $10 million or more. Historically, the industry has seen arbitrations as a way to resolve disputes without significant expense and before a panel that includes at least one industry expert; in other words, an expeditious and cost-effective dispute resolution process in a favorable and understanding forum.
Although the program is voluntary, it calls into question the reasons why broker-dealers have come to rely on the certainty and relative cost-effectiveness of arbitration.
This article discusses the new procedures of the pilot program in respect to the current FINRA arbitration process as well as its implications for broker-dealers.