New Arbitration Program vs. Going to Court

August 29, 2012Articles 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.

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