Series 82: 4.7.4. Dispute Resolution Procedures

4.7.4. Dispute Resolution Procedures

FINRA, through its Code of Procedure, has the authority to bring punitive action against member firms and associated persons for statutory and rules violations. Customers, member firms, and associated persons do not. Customers may file complaints to FINRA’s Department of Enforcement, which may trigger an investigation leading to a hearing and judgment, but FINRA will be the complainant. Nor can member firms and associated persons drag one another into a formal court proceeding.

Customers and associated persons generally sign away their right to take a disputed matter 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 to give up the right to sue in court.

Similarly, recall that customers sign agreements with brokerage accounts to settle disputes by arbitration. In addition, before any signat