When professionals registered with the Financial Industry Regulatory Authority are accused of bad acts or misconduct, they often will have to handle both the dispute resolution process and FINRA’s Investor Complaint Center. But, understanding the FINRA process can help make it much easier to navigate.
FINRA’s Investor Complaint Center
First, there is a difference between the FINRA’s ICC process and the dispute resolution process. Specifically, the ICC process is to alert FINRA about fraudulent and suspicious Los Angeles, California, broker and brokerage activity. This can then initiate a FINRA investigation into the broker or brokerage’s actions to determine whether any FINRA rule or other law has been broken.
Dispute resolution process
Conversely, the FINRA dispute resolution process is for investors seeking damages, like the return of their securities or money. The DR process is done through mediation and arbitration, and mediation can be utilized at anytime prior to the initiation of arbitration.
Mediation is a voluntary and informal process. In this process, an independent and neutral mediator attempts to negotiate a resolution between the parties. The parties select the mediator, when the mediation will occur and whether it will be successful. FINRA’s Mediation Program has an 80% success rate, and it is the cheapest and fastest way to resolve conflicts.
In an arbitration, either one or three independent, neutral, third-party arbitrators act as judges and make a decision, similar to going to court. Like mediators, arbitrators are chosen by the Los Angeles, California, parties, and the forums operate under SEC-approved rules. Arbitrations function much like a court, where both sides present their case, including arguments, testimony and evidence. Then, the arbitrator or arbitrator panel decides which side wins their case. That decision is called an award, and it is the final decision on the matter, binding for all of the parties.