NASD arbitration hearings are currently frozen in California, due to the NASD’s opposition to new state regulations governing arbitrators’ conflicts of interest and disclosure.
The NASD has taken the position that the state rules are unworkable, and the matter is pending before courts and regulatory bodies.
However, the Beverly Hills last firm last month argued that two cases involving clients who were terminally ill needed arbitration immediately. The federal court in downtown Los Angeles heard their pleas, and decided that arbitration hearings can go ahead in California in certain cases, if both plaintiffs and defendants agree to the “old regime” – the previous NASD standards.
“At least we can get these two cases heard, and the decision is serving as something of a template for other similar cases,” Ryan Bakhtiari said.
FINRA arbitration is a dispute resolution process administered by the Financial Industry Regulatory Authority (FINRA). It provides a forum for resolving monetary disputes between investors and securities firms or brokers without going to court. The process is generally faster and less formal than traditional litigation, and decisions are made by a panel of arbitrators who are knowledgeable in securities law and industry practices. Arbitration through FINRA is binding, meaning the decision is final and enforceable in court. This process is commonly used for disputes involving investment losses, unsuitable recommendations, or misrepresentation. Investors must agree to arbitration in their brokerage agreements, often as a condition of opening an account. While arbitration can be a more efficient way to resolve disputes, it also has limitations, such as limited appeal options and potentially high costs. Despite these challenges, FINRA arbitration remains a crucial mechanism for investor protection and dispute resolution in the securities industry.