The current turmoil in financial markets has led to an increase in disputes involving financial institutions. Parties may have entered into transactions in better times with little consideration given to the forum in which future disputes would play out. In today’s far more challenging circumstances, the choice of forum may be central to the satisfactory resolution of disputes.
In some areas, it is common for disputes involving financial institutions to be resolved through arbitration. The Financial Industry Regulatory Authority (FINRA) is the largest self-regulatory organization, i.e., non-governmental regulator, for all securities firms doing business in the United States. (FINRA’s rulemaking, however, is subject to approval by the Securities and Exchange Commission (SEC).) Both individual and institutional customers can require a FINRA member to arbitrate disputes. Indeed, most, if not all, securities broker/dealers will refuse to do business with customers who do not agree to arbitrate disputes. Disputes between FINRA members may also be submitted to arbitration.