New York State Bar Association Program Materials, "Securities Arbitration and Mediation," 2014
11 Pages Posted: 12 Jul 2015 Last revised: 22 Sep 2015
Date Written: July 7, 2014
When customers open brokerage accounts, most agree to mandatory arbitration clauses in their client agreements. FINRA is the regulatory authority of the brokerage industry, and it is the forum before which most of the arbitrations are heard.
When a customer case is filed in arbitration with FINRA, the customer has certain options if the amount in dispute is $50,000 or less, exclusive of interest and expenses. A customer may elect to have the case proceed as a Simplified Case, pursuant to FINRA Rule 12800. The rule was intended to help parties litigate smaller claims in a more cost efficient manner. The advantage of simplified arbitration is that it allows a customer the option of arbitrating a small claim on the papers (without a hearing) and with limited or no discovery, greatly reducing costs. The arbitrator renders an award based on the pleadings and "other materials submitted by the parties." These cases are often referred to as "paper" or "small claims" cases. This paper discusses the differences in procedure that apply to small claims cases at FINRA.
Keywords: FINRA, arbitration, simplified arbitration
JEL Classification: K22
Suggested Citation: Suggested Citation
Lazaro, Christine and Burns, Brent, Special Considerations in Simplified Arbitration Cases (July 7, 2014). New York State Bar Association Program Materials, "Securities Arbitration and Mediation," 2014; St. John's Legal Studies Research Paper No. 15-0031. Available at SSRN: https://ssrn.com/abstract=2629409