How does securities arbitration differ from litigation?

Arbitration is similar to a court proceeding in that both involve filing a complaint (or statement of claim) and introducing evidence through the examination of witnesses or documents. In litigation, the proceeding is called a trial and the case is heard by a judge or jury. In arbitration, it is called a final hearing and the case is heard by a panel of arbitrators.
Securities arbitration cases are administered by the Financial Industry Regulatory Authority (FINRA).

The benefits over litigation:

  • Arbitration is private. When you enter into securities arbitration, your financial matters and the losses you have incurred will remain private.
  • Arbitration is also generally faster and less expensive than a court proceeding.
  • When brokers and broker-dealers are ordered to pay an award by an arbitration panel they must do so within 30 days or risk being barred from the industry.


The downside of arbitration:

Unfortunately, with arbitration you give up certain constitutional and procedural rights that you would have had in a trial court. Most significantly, you have a limited right to appeal if you believe the arbitration did not comply with the law or that the facts dictated a different result than you achieved.