Skip to Content

Our Lawyers Explain the Differences Between Going to FINRA Arbitration and Filing a Securities Fraud Lawsuit in Court

When you suffer fraudulent investment losses, you have two main options for recovering your losses from the party that is responsible (i.e., a company or your broker). The first option is arbitration with the Financial Industry Regulatory Authority (FINRA). The second option is litigating your claim in court. The FINRA arbitration and courtroom litigation processes are very different, and when pursuing a claim for securities fraud, it is important to know what you can expect along the way.

Understanding the Differences Between FINRA Arbitration and Securities Fraud Litigation

Here is an overview of the major differences between FINRA arbitration and securities fraud litigation:

Statutes of Limitations

Under FINRA’s Rules, investors generally have six years to pursue fraud claims against their brokers and brokerage firms. The statute of limitations for pursuing a securities fraud claim in court is either two or five years in most cases (there are exceptions; so, even if it has been more than five years, you should still consult with a lawyer).

Discovery and Pre-Trial (or Pre-Hearing) Process

While FINRA arbitration involves discovery and various other pre-hearing procedures, the scope and timeline of these procedures are condensed compared to those in securities fraud litigation. The arbitration process prioritizes efficiency while still ensuring that investors are able to obtain the records and information they need to assert their legal rights.

Privacy

In FINRA arbitration, the arbitration process itself is kept confidential. However, the arbitration panel’s decision becomes public record. In contrast, the litigation process in court is generally public unless one or both parties successfully file to keep the case under seal. Even then, certain matters will still be open to the public. But, if the parties settle, the terms of their settlement will typically be confidential—this is true both in FINRA arbitration and in court.

Duration of the Process

According to FINRA, the average duration of an arbitration case is “a little over a year” when the parties reach a settlement. When arbitration cases go to a hearing, the average time to resolution is 16 months. Securities fraud lawsuits filed in court can have similar timeframes, although they can take much longer to resolve as well. According to research from Stanford University, the typical duration of a securities fraud class action case is three years.

Cost of the Process

Since litigation is more involved and often much longer in duration, seeking damages in court is generally more expensive than pursuing an award in FINRA arbitration. With that said, pursuing a securities fraud lawsuit will still be well worth it in many cases, and investors can work with their counsel to make an informed decision about how best to move forward.

Discuss Your Options with an Attorney at Zamansky LLC

If you believe you are a victim of securities fraud and would like to know about your options, we invite you to get in touch. To schedule a confidential consultation with an attorney at Zamansky LLC, please call 212-742-1414 or request an appointment online today. 

Tell Us About
Your Losses

Breaking Down Claims Eligible for FINRA Arbitration Practice Areas

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
View More
Tell Us About Your Losses Get Started