Understanding FINRA's Dispute Resolution Process

by Julie Mendel, SILA-A, CDEi | May 19, 2020
FINRA Resolution Dispute Process

FINRA’s Dispute Resolution Processes

FINRA assists with resolving securities related problems and disputes through non-judicial proceedings known as arbitration and mediation.

Arbitration is the most like a court proceeding but is typically faster, costs less and is not as complex as a judicial proceeding. In arbitration, two or more parties will select a neutral third-party arbitrator to resolve their dispute. The decision of the arbitrator, called the award, is final and binding upon the parties.  The size of an arbitration claim will determine how the arbitration process works. For claims involving more than $100,000, an in-person hearing is required with a panel of three arbitrators, one of whom will chair the hearing. For smaller claims, only one arbitrator decides a matter and for claims under $50,000, a simplified arbitration process may be used with only written documents submitted regarding the claim and no in-person hearing being required. 

Mediation is an alternative process to arbitration. In mediation, a trained and impartial mediator will facilitate negotiations between the parties, with a goal of finding a resolution that is mutually acceptable to all parties.  Mediation awards are non-binding and must be accepted by all parties to result in resolution of a matter. 

FINRA’s Code of Arbitration Procedure[i] provides rules that govern arbitration in FINRA's dispute resolution forum, while the Code of Mediation Procedure[ii] governs how parties mediate disputes through FINRA's Mediation Program including outlining:

  • Mediation's Effect on Arbitration Proceedings;
  • Representation in Mediation;
  • Mediator Selection;
  • Mediation Ground Rules; and
  • Fees.

Recent changes are contained in Regulatory Notice 19-20, in which FINRA amended response times for certain matters, including responses to arbitration subpoenas for document production and witnesses and made changes designed to enhance the discovery process for forum users.


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[i] https://www.finra.org/arbitration-mediation/code-arbitration-procedure

[ii] https://www.finra.org/arbitration-mediation/mediation-rules