How to File a Securities Arbitration Claim

By Kristof, Kathy | THE JOURNAL RECORD, May 19, 1994 | Go to article overview
Save to active project

How to File a Securities Arbitration Claim


Kristof, Kathy, THE JOURNAL RECORD


If you have a sticky dispute with a broker that can't be settled amicably, there is a viable and fairly low-cost way to settle it: binding arbitration.

Securities arbitration, which allows an impartial third party to adjudicate broker-client disputes, is the mandatory form of settlement procedure when brokers and their clients have a rift. That's because most brokerage firms require customers to sign arbitration agreements when they open accounts.

The benefits of arbitration are clear: Cases are heard fairly quickly _ usually within one year vs. up to five years in civil courts _ and the cost is reasonable.

The bad news is that there is little, if any, chance to appeal an adverse decision. Unless the arbitrator is biased or had a clear conflict of interest, the decision is legal and binding.

Arbitration filing fees range from about $30 for a small case where the amount in dispute is less than $1,000 _ to $1,800 for cases where the amount in dispute is over $5 million.

Plaintiffs can represent themselves, or be represented by anyone they choose. They do not need to hire a lawyer or an arbitration specialist. (However, most experts recommend hiring a professional when the dispute involves a lot of money. That's because the brokerage is almost always represented by an attorney; big-money disputes are usually stickier and more hotly contested. A General Accounting Office study found that customers were much more likely to win when they were professionally represented.)

If you have a fairly small claim _ anything under $10,000 _ you can take it to "simplified arbitration," which is the arbitration industry's answer to small claims court. Notably, simplified arbitration is faster, cheaper and more fruitful for investors.

Where the average securities arbitration case takes roughly 10 months to complete, simplified arbitration procedures are generally finished in five.

In-person hearings, technical motions and attorneys generally are unnecessary. So frequently the only cost to the investor is the filing fee of $30 to $225, depending on the size of the case and whether the investor requests an in-person hearing or is content to handle the matter by mail.

Investors are also more likely to win a simplified arbitration case than an ordinary securities arbitration case, says Samantha Rabin, managing editor of the Securities Arbitration Commentator, a New Jersey-based newsletter that tracks such statistics. Investors who go through simplified arbitration win about 70 percent of the time vs. about 50 percent of the time in ordinary arbitration hearings.

How do you file an arbitration claim?

The first step is to find out which regulatory organization has jurisdiction and the requisite expertise to handle your dispute.

There are several organizations that handle such hearings, including the New York, American, Pacific, Cincinnati and Philadelphia stock exchanges, not to mention the Chicago Board Options Exchange (CBOE) and the Municipal Securities Rulemaking Board (MSRB).

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

How to File a Securities Arbitration Claim
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?