Today, nearly all reputable brokerage firms require clients to sign binding arbitration agreements as part of their account opening documents. In the event of a dispute, these agreements force investors to bring litigation against their brokerage firms first through what is called the FINRA arbitration forum. While not a court of law, the arbitration forum is run by a the securities industry regulatory agency, FINRA, and it aims for equitable and just outcomes.
A Panel of Financial Professionals Instead of a Jury of Your Peers
As anyone familiar with the forum will tell you, aiming for and hitting the target are two very different things. Unfortunately for investors, they will not have their case heard before a jury of their peers; instead, if their case is not settled at some point along the way, they will likely face a panel of one or three arbitrators selected from a pool of qualified professionals. And there’s the rub: while a jury would drawn from a group of peers, an arbitration panel is more like a jury of your adversary’s peers, since chances are the claimant in a securities case has never worked in the financial industry or received any education or training in investing.
There is one very good thing about the arbitration forum versus the court of law as a venue for your claim. FINRA arbitration proceedings generally take a year or so to be resolved. That’s much faster than it might take for you to get your case heard in court. And FINRA is working to make the process move even faster, especially for older investors who can’t afford to wait for a resolution to their claims.
New Expedited Processing for Elderly Claimants
According to a recent announcement from FINRA’s Office of Dispute Resolution, they are drafting a new rule which would tag cases involving claimants 75 years or older for expediting processing. FINRA already has expedited processing available for 65 year or older or sick claimants — but the deadlines that generally determine the timing of the arbitration do not change. FINRA’s new rule would tackle that problem and hopefully greatly improve how quickly expedited claims move through the process by changing — ie, shortening — the actual deadlines.
This is great news for elderly or infirm investors who desperately need the money they lost back in order to pay for end of life care or simply to keep up the lifestyle they are accustomed to. The more FINRA does to help claimants get a fair chance at justice, the less biased the forum may become, since there is no prospect of the typical securities claims being heard in a court of law anytime soon.
