Simple English definitions for legal terms
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Securities dispute resolution refers to the process of settling disagreements between two or more parties in the securities industry. This is often done through mediation or arbitration, which are non-judicial methods of resolving disputes. Mediation involves a third party who helps guide the parties towards a resolution, while arbitration is a more formal process where an arbitrator makes a decision. Most new account agreements in the securities industry include an arbitration clause. It's important for investors to seek legal advice when going through these processes.
Securities Dispute Resolution refers to the methods used to settle disputes between two or more parties in the securities industry. These methods include mediation and arbitration, which are non-judicial processes.
Mediation is a negotiation process that involves a third party mediator who helps the parties involved in the dispute to reach a resolution. The mediator does not have the power to impose a solution on the parties, but rather guides them towards a resolution by encouraging communication and understanding between them. In the securities industry, mediators can provide unbiased expertise that may help to resolve disputes. For example, if two investors have a disagreement about a stock, they can use mediation to resolve the issue.
Arbitration is a semi-formal, semi-complex process for resolving disputes. It was intended to provide a flexible, cost-effective alternative to litigation. In the securities industry, arbitration is managed by the Financial Industry Regulatory Authority (FINRA). When deciding whether to arbitrate, an investor should bear in mind that if the broker or brokerage firm goes out of business or declares bankruptcy, the claimant might not be able to recover any of the award granted in arbitration. For example, if an investor has a dispute with a brokerage firm, they can use arbitration to resolve the issue.
Securities Dispute Resolution methods are important for resolving disputes in the securities industry. Mediation and arbitration are common methods used to settle disputes. Mediation involves a third party mediator who helps the parties involved in the dispute to reach a resolution, while arbitration is a semi-formal, semi-complex process for resolving disputes. Both methods can be used to resolve disputes between investors and brokerage firms.
Securities and Exchange Commission (SEC) | Securities dispute resolution: Deciding whether to file an arbitration claim