Why do investors have to use FINRA arbitration for investment fraud / stockbroker claims?
Virtually all stockbroker claims are decided in arbitration rather than court. That is because brokerage firms require their customers to sign agreements saying that the customer waives the right to go to court, and instead agrees to arbitrate all disputes. Stockbroker arbitrations are filed with FINRA, the Financial Industry Regulatory Authority, formerly known as the NASD. For the past 20 years, the courts have consistently upheld and enforced these agreements, eliminating the ability of most investors to file their claims in court.
