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How the Claims Process Works

Most claims against a broker or brokerage firm are subject to arbitration because of the arbitration clause that is a part of virtually all new account forms that one fills out when signing up with a brokerage firm. Claims relating to losses not subject to an arbitration clause can be brought in court, and this is often the preferable forum. Most arbitrations are conducted by the National Association of Securities Dealers, Inc. (NASD) and the New York Stock Exchange (NYSE). There is little difference between the two, but we can help you decided which is appropriate for your case.

The arbitration process consists of the following phases:

  • A Statement of Claim is filed with the NASD or the NYSE, setting forth the claims one (the Claimant) has against the broker and/or brokerage firm (the Respondents).
  • A response, provided by the broker and/or firm.
  • Discovery, in which both sides may request documents deemed relevant to the dispute.
  • The hearing, where the parties present their respective sides of the dispute to the arbitration panel. The panel is usually composed of three individuals, two of whom are public arbitrators not affiliated with the securities industry and one who is so affiliated.
  • Determination by the panel whether the Claimant should be reimbursed for the losses sustained and/or recover additional damages.

The arbitration process generally takes six months to a year from the time of filing to complete. You can find a detailed description of the arbitration process at NASD Dispute Resolution, and we would be happy to answer any questions.

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