The mediation of securities brokerage disputes is a newly emerging approach that has gained considerable interest over the past several years. Mediation involves the selection of a single, mutually-acceptable mediator who would devote time and experienced mediation skills towards an effort to resolving a customer dispute through intensive discussion and negotiation sessions with the clients and attorneys on both sides of the dispute.
Mediation services are available under the auspices of the Office of Dispute Resolution of the Financial Industry Regulatory Authority (FINRA), as well as through a number of private mediation services. Typically, mediators are experienced business people and include individuals who have worked as brokerage firm managers, attorneys, judges and/or accountants. They are paid by the parties pursuant to a negotiated fee arrangement.
Although the results of a mediation session are not binding, in over 85% of the cases that are mediated, investors agree to the settlement ultimately arrived at by the mediator and agree to settle their claims with brokerage firms.
Advantages of mediation include reduced arbitration hearing session fees, reduced expert witness fees and significantly less time spent in the discovery and hearing process associated with arbitration.
A party who is unhappy with the results of mediation and who does not agree to settle in accordance with a mediator's recommendation or an adversary’s offer of settlement, will have the right to pursue his or her claim through arbitration or litigation, if applicable, if their rights to pursue the same have been properly reserved.
