What Is Arbitration?Whether you know it or not, you agreed to submit any dispute with your broker to a binding arbitration panel. Arbitration of broker/dealer disputes has long been used as an alternative to the courts because it is a prompt and inexpensive means of resolving complicated issues. There are certain laws governing the conduct of an arbitration proceeding that must be considered by those planning to use arbitration to resolve the dispute. Most importantly, perhaps, is the fact that an arbitration award is final and binding, subject to review by a court only on a very limited basis. Parties should recognize, too, that in choosing arbitration as a means of resolving a dispute, they generally give up their right to pursue the matter through the courts.
1. Statement of Claim - File with the Director of Arbitration a typewritten or printed document stating the claim. The claimant should attach copies of documents and supporting materials as exhibits to the Statement of Claim. The claimant should provide sufficient copies for each party, the arbitrators, and the self-regulatory organization.
2. Small - Claims Procedures- If the amount of the claim is $25,000 or less, the claim will can be processed under the Simplified Arbitration Procedures (NASDR). In public customer disputes, unless the public customer requests a hearing, the claim will be decided solely on the basis of reading the parties' submissions. The arbitrator, however, also may request a hearing or require a party to submit additional documentation. Parties may ask to submit additional documents to an arbitrator who is deciding the case without a hearing.
3. Service of Pleadings- After the initial Statement of Claim is served by the Director of Arbitration, it is each party's responsibility to provide every other party directly with any further pleadings, motions, or correspondence.
4. Counsel- State whether the claimant will be represented by an attorney and, if so, the attorney's name, address, and telephone number.
5. Location - State where the claimant wants the case to be heard and the reasons for that choice. Generally, in public customer cases, the hearing location is close to where the customer resided when the dispute arose regardless of a predispute agreement to the contrary.
6. Arbitrators - The proposed panel will be composed of a majority of persons from outside the securities industry. If a public customer would like a panel consisting of a majority of arbitrators from the securities industry, he or she should indicate that preference in writing when filing the claim.
7. Submission Agreement- Complete and return three signed and notarized copies of the Submission Agreement provided by the sponsoring organization. By signing the Submission Agreement, the claimant agrees to submit the dispute to arbitration and to abide by the decision (the "award") of the arbitrators.
8. Filing Fees and Deposits- Include a check or money order made payable to the sponsoring organization for the appropriate non-refundable filing fee and hearing session deposit. Additional deposits also may be required to be made for prehearing conferences with an arbitrator and for the postponement of a scheduled hearing date after the arbitrators have been selected. The arbitrators will determine in the final award if these deposits will be returned or assessed to another party. See the arbitration rules of the sponsoring SRO for the definition of a hearing session, as well as the appropriate fee and deposit.
9. Disclosure of Arbitration Award - At some sponsoring organizations, public customers must state in writing whether they either permit or decline to permit the inclusion of their names in the public version of the award.
10. Incomplete Filing of a Claim- A filing may be returned if it does not comport with the rules. The Statement of Claim, with exhibits, Submission Agreement, and non-refundable filing fee and hearing session deposit should be submitted to the Director of Arbitration of the sponsoring organization at the address listed at the end of this pamphlet. All pleadings, correspondence, and exhibits after the claim is served must be sent to all parties directly with sufficient additional copies sent to the Director of Arbitration for the arbitrators and for the Arbitration Department.