Securities Arbitration (Part I)

Do I have to submit my case to arbitration?

Nearly all brokerage firms include an “arbitration clause” in their customer agreements requiring all disputes to be submitted to binding arbitration. The typical arbitration clause provides that the arbitration will be conducted before an organization such as the Financial Industry Regulatory Authority (FINRA), which is a consolidation of the regulatory branches of the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD). Arbitration is mandatory, except in a few limited situations, such as when a class action lawsuit is involved.

How does arbitration work?

Securities arbitration has evolved into a specialized field of law. A thorough knowledge of both securities law and securities industry practices is essential. Although arbitration is less formal than a courtroom trial, differences can be deceiving.

How long will arbitration take?

Brokerage firms are lodging vigorous defenses, and cases are taking longer to conclude. Aggressive preparation is the rule, rather than the exception. Due to the increase in arbitration filings, it now takes approximately 17 months to bring a case to conclusion.

How much will arbitration cost?

Arbitration fees vary depending upon the complexity and size of the case.

Attorney Fees: Most clients prefer a contingent fee arrangement, which means that the client only pays attorney fees if there is a recovery. However, clients remain responsible for costs and expenses. The Alcala Law Firm offers both contingent and hourly fee arrangements.

Filing Fees: Filing fees vary depending upon the amount in controversy. For instance, the FINRA filing fee is $975.00 for an amount in controversy between $50,000.01 - $100,000.00 and $1,425.00 for an amount in controversy between $100,000.01 - $500,000.00.

Other Costs: In a straightforward arbitration claim, typical expenses will include the arbitration forum fees; document production and photocopying costs; and exhibit preparation expenses. If there were a lot of transactions in the account, a profit and loss report is often required. In some instances, the services of an expert witness may be needed as well.


Next Page >>