How are financial-services and securities disputes resolved, including through FINRA?

Financial-services and securities disputes — between investors and brokerage firms, among financial institutions, or between firms and their employees — are frequently resolved through arbitration and mediation rather than court. Many securities disputes are handled through FINRA, which operates the largest securities dispute-resolution forum in the world. FINRA member firms and their registered representatives are contractually bound to arbitrate covered disputes, and customers are commonly bound by arbitration clauses in their account agreements. In FINRA arbitration, one or a panel of three arbitrators — the number depending on the amount in controversy — hears the evidence and issues a final, binding decision, while FINRA mediation is a voluntary process that becomes binding only when the parties sign a settlement. These specialized forums exist because securities disputes benefit from neutrals who understand the industry and its regulation.