Securities Litigation

Richard W. Kozlowski, Attorney

Rick Kozlowski

Resolving a Securities Dispute

In the financial services industry, disputes are generally subject to arbitration by virtue of contractual obligations or industry rules.  When an investor seeks to resolve a claim against a broker or a financial services firm, the investor is usually bound by an arbitration clause in the account agreement signed when opening the account.  That arbitration clause will prevent the investor from seeking relief in a court of law.

Typically, although not always, arbitration is conducted before the Financial Industry Regulatory Authority (FINRA), which has regulatory oversight of all securities firms doing business in the United States.  After determining the proper forum, an arbitration is commenced by filing a statement of claim which sets forth the facts of the case and the damages claimed by the injured party.

The parties to the arbitration will proceed in a manner similar to a court action.  That is, the parties will conduct discovery, file any necessary motions, identify witnesses, gather evidence and otherwise prepare for the arbitration hearing.  The parties will also select an arbitration panel which will hear and decide the claim at the arbitration hearing.

The location of the arbitration hearing is generally determined by the applicable arbitration rules.  FINRA rules provide that the hearing is held at a location near to the customer.  In Vermont, FINRA hearings are often held in Montpelier.

The arbitration hearing is conducted like a court trial.  There are opening statements, the introduction of evidence, and closing arguments.  The rules of evidence apply to arbitration hearings, although, in practice the rules are more relaxed than in a formal court trial.

After the hearing, the arbitrators will render an award which will grant some, all or none of the claimant’s requested damages.  Typically, the grounds for an appeal of the award are very limited and the award becomes final and binding.

If you have any questions, please contact Rick at 802-864-5756.

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