New Jersey Securities Arbitration [Quick Guide]

securities arbitration Sea Girt, NJ

In New Jersey, securities arbitration is becoming increasingly common. However, securities arbitration remains a mystery for those individuals who have not participated in the process. Here is a brief primer to get a better sense of what the securities arbitration process can look like. While far from all-encompassing, this quick guide can provide some insight into what to expect from start to finish.  

Securities Arbitration: The Basics

Securities arbitration is a specific type of dispute resolution process, considered to be an alternative to a traditional lawsuit filed in court.  Impartial individuals experienced in the area of securities resolve this proceeding. Only in rare situations will a FINRA arbitration panel not resolve securities arbitration. The securities arbitration process was explicitly intended to resolve these issues, as established by the United States Supreme Court decision in 1987 as an efficient and inexpensive way to resolve these disputes.  Considering the specific laws in New Jersey governing securities arbitration, the decisions are considered final and binding, only subject to review in even more rare situations. 

In addition, most disputes will occur in securities arbitration because most brokerage firms use arbitration agreements included in the contracts signed by both the broker and the customer. 

Securities Arbitration: The Process

  1. First, the Statement of Claims is filed with the Uniform Submission Agreement and the corresponding arbitration fees. The Statement of Claim identifies the parties, states the facts that occurred, and the damages requested as a result of the dispute.  The Uniform Submission Agreement provides a written statement by the parties agreeing to submit the dispute to the panel of arbitrators.  In addition, the fees that are filed correspond to the amount of the disputed claim, ranging from around $325 to a maximum of $1800. 
  2. Second, the opposite party files their Answer to the allegations contained in the Statement of Claim. The Answer does not need to be a point-for-point rebuttal but must contain the available defenses intended to be relied upon and the facts to support those defenses.  
  3. Third, the arbitrator or arbitrators are selected, consisting of either one or three people, and depending on the claim amount.  
  4. Fourth, the parties go through the discovery process, which includes verifying the information and exchanging documents to be used later during the arbitration proceeding.  In some limited situations, depositions can be taken of the opposing party.  Though the discovery was initially intended to be a relatively expedient and inexpensive process, the recent trend has significantly expanded the discovery process. Though a less sensational process than the actual arbitration, this phase is particularly significant in preparing for the actual arbitration and usually provides greater insight into the prospects of success.
  5. Finally, the actual securities arbitration occurs, which is very similar to a courtroom trial, including opening statements, introducing evidence, countering evidence introduced by the opposite party, rebuttals, and closing arguments.  The arbitration hearing usually only lasts for four consecutive days ending in an Award served on the basis of the information presented to the arbitration panel. 

Call (732) 449-0449 to schedule a consultation with Anthony J. Cafaro, P.C. in our Sea Girt office.

NOTE: This blog is for informational purposes only and does not constitute legal advice

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