Series 22: 6.6.3. FINRA Code Of Arbitration

 6.6.3.  FINRA Code of Arbitration

Separate from FINRA’s disciplinary process, FINRA provides arbitration and mediation to settle disputes between customers, member firms, and associated persons. In many cases, the use of arbitration is mandatory. Customers and associated persons generally sign away their right to take a dispute to court. Form U4 contains a predispute arbitration clause. Upon signing this form, a new employee agrees to settle any disputes with member firms or customers by arbitration, and gives up the right to sue in court. Similarly, when a customer sets up an account with a broker-dealer, he typically agrees to a similar predispute arbitration clause. Before any signature line on the customer account contract, there must be a highlighted statement saying that the agreement has a predispute arbitration clause, and stating where in the contract the clause is located.

Predispute arbitration agreements are not always binding. They do not apply to alleged violations of laws aga