Arbitration or Court

Whether you have a choice of where to bring your claims for broker misconduct, investment advisor misconduct, variable annuities sales misconduct, or variable universal life insurance fraud depends upon whether you agreed in your opening account documents to arbitrate any dispute with your broker. If so, that agreement will require you to pursue your recovery in an arbitration proceeding. If you didn't sign an arbitration agreement, it usually will be your choice whether to file suit in court or to commence an arbitration. There are advantages and disadvantages to each approach.

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Arbitrations are generally conducted before three arbitrators, one of whom will be a stockbroker or other member of the securities industry. The other two panelists will usually be lawyers, accountants, or other business persons drawn from outside the industry, although persons of almost any background can technically become public arbitrators. Arbitration involves simplified procedures that can substantially reduce certain costs, although some costs of arbitration such as filing fees and session fees actually are substantially higher than one would pay in court. Arbitration awards generally are not appealed so they usually get paid promptly. Finally, arbitration usually gets completed more quickly than a lawsuit.

Being in court also presents some advantages over arbitration. Jurors tend to be somewhat more sympathetic than arbitrators in a close case. And litigants in a lawsuit also have much more extensive fact finding procedures at their disposal. Finally, the judge presiding over a lawsuit is often actively involved in mediating a settlement between the parties.

Tony Hartman, Jay Salamon, Hugh Berkson, Henry Kerr, and Jane Conrad are attorneys in the law firm of Hermann Cahn & Schneider, and have extensive experience in handling both lawsuits and arbitrations. After discussing the specific facts of your case, one of our investment misconduct lawyers can tell you whether you have a choice between the two, and if so, we can help you choose the forum that's right for you.