Securities arbitration is the usual method of resolving securities related disputes between brokerage firms and their customers.

In the United States, securities arbitration is the preferred method of resolving disputes between brokerage firms, and between firms and their customers. The securities industry uses a pre-dispute arbitration agreement, where the parties agree to arbitrate their disputes before any such dispute arises.

Pre-dispute arbitration agreements

A pre-dispute arbitration agreement is included in virtually all Customer Agreement forms used when opening a new account. Because is may be buried in fine print and is regardless a requirement to open an account, customers may not realize they are waiving rights to litigate and agreeing in advance to arbitration. Even so, those agreements were upheld by the United States Supreme Court in Shearson v. MacMahon, 482 U.S. 220 (1987) and today nearly all disputes involving brokerage firms are resolved in securities arbitration. Securities arbitrations are held primarily by the Financial Industry Regulatory Authority ("FINRA").

Firms and brokers required to submit to arbitration

Because brokerage firms and brokers are members of NASD and various securities exchanges, they are obligated by the rules to those organizations to submit to arbitration of customer disputes at the demand of the customer. Consequently, the majority of disputes between stockbrokers and their customers are resolved in arbitration rather than in court.

Contact a Securities Arbitration Attorney

The experienced attorneys at Arnold & Itkin LLP aggressively represent our clients and can help you in litigation or arbitration of securities and investment fraud claims.

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