What FINRA Arbitration Is
FINRA operates a mandatory arbitration program for disputes between investors and FINRA member firms. When you signed your brokerage account agreement, you almost certainly agreed to mandatory arbitration. This means that if you have a claim against your broker — for best execution failures, account mismanagement, fraud, or other misconduct — you must resolve it through arbitration rather than court.
How to File
To file a FINRA arbitration claim, you complete a Statement of Claim through FINRA's online filing portal (finra.org/arbitration-and-mediation). You pay a filing fee based on the amount of your claim. Claims under $50,000 are handled through a simplified procedure; larger claims go through the full arbitration process, which involves a panel of arbitrators, a discovery period, and hearings.
Whether to Use an Attorney
FINRA arbitration rules do not require legal representation, but experienced securities attorneys generally recommend it for claims above small amounts. Securities attorneys who specialize in investor claims know the arbitration process, can evaluate the strength of claims, and are familiar with the arbitrators. Many work on contingency for investor claims.
Outcomes and Appeals
FINRA arbitration awards are generally final and binding — appeals in court are available only on very limited grounds (fraud, arbitrator corruption, etc.). Win rates for investors in FINRA arbitration vary by claim type and are lower than many investors expect. Understanding this before filing is important; some claims may be better addressed through regulatory complaints or mediation.