Preparing for Arbitration

Essay by bvqb1515University, Master'sA+, June 2004

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Business in the securities industry for the most part is conducted fairly, efficiently, and in a manner that satisfies everyone involved. Occasionally, however, disputes or problems arise. For example, you may disagree with how your broker handled a transaction. If you cannot resolve the matter yourselves, there are effective alternative dispute resolution mechanisms, which usually result in a swift conclusion without the inconvenience and expense of a court "battle." There are important measures to take when preparing for an arbitration session with an NASD arbitrator. After explaining how to prepare for arbitration an opinion will be stated regarding the fact that most arbitrators are chosen by the National Association of Securities Dealers.

The most important step in preparing or arbitration, is educated yourself in the arbitration process. Arbitration starts with your Statement of Claim, a description of what happened, written in your own words. You should tell the story clearly, concisely, accurately, honestly, completely, and in detail so that someone reading it will understand what happened, what monetary damages you are seeking and why you feel you are entitled to receive a favorable decision.

After the statement of claim, the arbitration hearing takes place. It is important to understand the different procedures used concerning the size of the claim and prepare yourself according to that claim. If your claim is for $25,000 or less, it is considered a small claim and usually a single public arbitrator will render a decision solely by reading the statements and supporting materials submitted by each party. However, as an investor you may request a hearing where you appear instead of having the decision made on reading the papers of the parties. The arbitrator might request a hearing if he or she feels it is necessary. In cases where the claim is for...