The Arbitration Process

Most disputes between investors and brokerage firms are resolved by arbitration, instead of a lawsuit in court. This is because most brokers require their customers to sign agreements at the time accounts are opened requiring arbitration of any disputes. Most investors are unaware they have waived their right to a trial in court at the time they sign these “customer agreements.” Although securities disputes may be resolved by means of a traditional lawsuit in co1u’t, this discussion will focus on the commonly-used arbitration procedure. For present purposes, it will suffice to state that court litigation is more expensive and time consuming than arbitration, although it presents certain procedural advantages which can be the topic of further discussion between us, if necessary…

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