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Securities Arbitration

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When a customer establishes a brokerage account it is common that he/she signs a contract with the brokerage firm agreeing to arbitrate any and all disputes with the Financial Industry Regulatory Authority ("FINRA") that oversee and regulate the securities industry. By arbitrating a claim, the customer foregoes the opportunity to have the same matter decided by a court of law. Arbitration awards are final and binding.

In arbitration the customer is called the claimant and the brokerage firm the respondent. One initiates an arbitration claim against their brokerage firm by submitting a document called Statement of Claim, which is the complaint. FINRA serves the Statement of Claim to the respondent and it submits an Answer to the Statement of Claim.

Both sides engage in selecting an arbitration panel in a rank and strike system. Once an arbitration panel is appointed, generally a three member panel, an arbitration date is selected. The parties are provided an opportunity to engage in discovery to gather documents from each other to help prove or defend their case.

At the arbitration hearing the process is similar to a trial where parties have opening statements, present and cross exam witnesses, introduce documents into evidence and have closing arguments. The arbitration panel renders an award after deliberations.

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