Will arbitration replace class actions in investor disputes?

FRT Admin
Site administrator
December 8, 2015

judge-e1436288505356Recently, the Consumer Financial Protection Bureau has been trying to implement mandatory arbitration of individuals against businesses rather than allowing class actions. When signing up for financial products, most contracts waive the customer’s right to participate in class-action lawsuits against the company. By law, brokerage firms are not allowed to include such statements in agreements under the Financial Industry Regulatory Authority laws. FINRA states that investors can either follow through with arbitration (taking direct action) or become part of a class action.  An investor’s decision to opt-out or stay a part of the class is generally based on the size of their loss.

Investors that have suffered a large loss don’t always consider the option of pursuing direct arbitration. An investor can potentially recover significantly more in a private action compared to what they would recovery by joining the class. The opt-out option is generally a quicker process compared to the length of a class action which may take years to be resolved. FINRA does give the option to request hardship waivers for arbitration filing fees which are scaled to the size of the claim. Investors can also represent themselves or receive assistance from securities arbitration clinics. Investors should be wary of whether the firm or broker they are dealing with is regulated by FINRA because if they are not registered, investors may not have access to FINRA’s arbitration arm.

Read more about arbitration vs class actions in investing here.

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Founded in 2008, Financial Recovery Technologies (FRT) is the leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability, and transparency available. For more information, go to www.frtservices.com.

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and do not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.

ABOUT FINANCIAL RECOVERY TECHNOLOGIES
SETTLED  I  NON-US GLOBAL OPT-IN  I  ANTITRUST  I  GLOBAL PASSIVE  I  DIRECT OPT-OUT  I  BUYOUTS

Founded in 2008, Financial Recovery Technologies (FRT) is a leading technology-based services firm that helps the investment community identify eligibility, file claims and collect funds made available in securities and other class action settlements. Offering the most comprehensive range of claim filing and monitoring services available, we provide best-in-class eligibility analysis, disbursement auditing and client reporting, and deliver the highest level of accuracy, accountability and transparency available. For more information, go to www.frtservices.com.

 

This communication and the content found by following any link herein are being provided to you by Financial Recovery Technologies (FRT) for informational purposes only and does not constitute advice. All material presented herein is believed to be reliable but FRT makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Opinions expressed in this communication may change without prior notice. Firms should always seek legal and financial advice specific to their unique situation and objectives.