Whether you have a choice between pursuing your claim in court or in binding arbitration depends primarily on whether you have signed an agreement to submit to arbitration. Most brokerage firms now require their customers to sign such an agreement when they open an account. An agreement to arbitrate will usually be enforced, so if there is one you can generally be required to arbitrate. However, before concluding that a dispute must be arbitrated you should consult a lawyer who is experienced in investment cases.

If you have a complaint against your stockbroker, and you have not signed an agreement to submit to arbitrate, you are in the driver's seat. The rules of the National Association of Securities Dealers requires its member firms and their brokers to submit to arbitration before it if the customer chooses to arbitrate. All brokerage firms must by law be members of the NASD. Therefore, in these circumstances, the customer can choose whether to arbitrate or go to court. Arbitration and court each have their advantages and disadvantages .

If your complaint against an investment advisor or financial planner, who may not be associated with a brokerage firm that is a member of FINRA (formerly known as NASD), and you don't have a written contract that requires arbitration, your only choice is court, unless the defendants will agree to arbitrate.

DISCLAIMER: Vincent DiCarlo, who authored and maintained this site, has entered government service and, as of September 1, 2008, is no longer engaged in the private practice of law.  Therefore, this site is no longer being maintained,  may not be accurate, and should not be relied upon.  It is not now and was not ever intended as legal advice.  It is being provided for historical purposes, and for the benefit of those lawyers who are capable of independently verifying the information and judging the opinions in it, and then reaching their own conclusions.  You are strongly advised to consult qualified legal counsel before adopting any of the ideas or suggestions in this material, which may or may not be applicable in your jurisdiction or to your specific situation, and may no longer be accurate or prudent in any case.  The opinions and statements at this site were solely those of the author.  They were not and are not those of, nor were they nor are they made on behalf of, any agency of government or anyone else.

Copyright © 1998-2008 Vincent DiCarlo