FAQs - Frequently Asked Questions

Q. What is a predispute arbitration clause?

A. Virtually every securities brokerage firm will provide you with a standard new account form with a clause that requires you to pursue any grievance through arbitration proceedings instead of the court system.  The U.S. Supreme Court decision, Shearson v. MacMahon, 483 U.S. 220 (1987) enforced mandatory binding arbitration clauses in the securities industry. 

Q. How does arbitration work?

A. Arbitration is just like a trial except instead of a judge and jury you get a panel of one to three arbitrators which act as both judge and jury. They hear and weigh the arguments and evidence of both sides of a case, then render a binding decision. The arbitrators generally include at least one “industry” person and two “non-industry” people. This may include accountants, attorneys, sales representatives, bankers, educators, retired judges and other professionals. Unlike court proceedings, arbitration usually doesn’t involve depositions, motions, or appeals. It’s usually much faster and cheaper than civil court. The average length of time is 12 months from filing to the first hearing versus more than two years in state or federal court.

Q. Who conducts the arbitration proceedings?

A. The two main forums for resolving securities arbitration disputes are:

  • The American Arbitration Association
  • The Financial Industry Regulatory Authority (FINRA)

Q. What is the Financial Industry Regulatory Authority (FINRA)?

A. The Financial Industry Regulatory Authority is the largest independent regulator for all securities firms doing business in the United States.  FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry.  FINRA oversees the activities of more than 3,957 securities firms with approximately 643,322 brokers/registered representatives.

Q. Where is the FINRA arbitration proceeding held?

A. The hearing location is typically at the FINRA location located closet to where the investor lived at the time of the investment.

Q. Does it matter that we are in different states?

A. No, we will travel to the FINRA location.  We represent investors nationwide. 

Q. I live outside the United States. Do I file in my country or where the brokerage firm is located?

A. Because of FINRA Rules governing the jurisdiction of brokerage firms, international clients with brokerage accounts with a FINRA registered firm must file arbitration cases in the United States.

Q. How does Carmel, Milazzo & DiChiara LLP set its fee?

A. We work on a contingency fee; if you recover nothing, you pay no legal fees. However, if you do recover your claim or any portion of your claim, you are responsible for paying Carmel, Milazzo & DiChiara LLP a percentage of the amount recovered.  We also offer contingency, hourly, and hybrid fee models. 

Q. How much will it cost to file a Statement of Claim in an arbitration proceeding?

A. Each forum charges its own filing, administrative and hearing fees. The average filing fee with FINRA is approximately $1,200. The greater the amount of your claim, the greater your filing and administrative fees will be. If the case settles, a portion of this fee may be returned.

Q. What other costs are involved?

A. Although our initial consultation is free, you can expect to incur expenses related to preparing a damages exhibit for purposes of mediation and/or arbitration. If the case does not settle (the majority do) then an expert witness may have to be retained to testify on your behalf. Though we are essentially experts ourselves, we–as your attorneys–cannot testify. We have retained the services of numerous, nationally-recognized experts in the securities industry.