ArbitrationIntel — Arbitration Basics
Securities arbitration is the resolution process for disputes over investments — whether the claim is against a registered broker-dealer through FINRA, or against an investment adviser, promoter, or issuer through AAA or JAMS. It's the mechanism behind nearly every recovery for churning, unsuitable recommendations, misrepresentation, and outright investment fraud.
I. The Territory Beyond FINRA
FINRA arbitration handles disputes with registered broker-dealers. But investment losses also happen through registered investment advisers (RIAs), who aren't FINRA members and instead follow whatever arbitration provision — often AAA or JAMS securities-arbitration rules — is written into the advisory agreement. And a large share of investment fraud happens completely outside any registered channel: private placements sold by an unregistered promoter, a Ponzi scheme dressed up as a real estate fund, or a "guaranteed" cryptocurrency investment that was never a real security offering. Securities arbitration, as a category, covers all of it.
Whether arbitration even applies to an unregistered promoter's fraud depends entirely on whether you signed an agreement containing an arbitration clause — if there wasn't one, a claim generally proceeds in court instead.
II. FINRA Arbitration vs. Broader Securities Arbitration
III. Common Claim Types
Unsuitability
A recommendation that didn't match your stated risk tolerance, goals, or time horizon.
Churning
Excessive trading generating commissions for the broker without benefiting the client.
Unauthorized trading
Trades executed without your knowledge or consent showing up on your statements.
Misrepresentation & omission
Material facts about risk, fees, or the investment itself withheld or misstated.
Breach of fiduciary duty
An adviser putting their own interests, or their firm's, ahead of yours.
Ponzi & private placement fraud
Returns paid from new investor money, or offerings that misrepresented risk entirely.
IV. Statute of Limitations & Damages
A FINRA claim must be filed within FINRA's own six-year Eligibility Rule, separate from any state statute of limitations. Claims that fall outside FINRA — against an RIA or an unregistered promoter — are instead governed by the statute of limitations attached to the underlying legal claim (fraud, breach of contract, breach of fiduciary duty), which varies by state and can run considerably shorter than six years. Recoverable damages typically include compensatory damages for actual losses, and depending on the forum, the governing law, and the facts, may include interest and, in cases involving fraud, punitive damages.
V. Questions Investors Ask First
Securities arbitration is the private resolution process for investment disputes — claims against registered broker-dealers through FINRA, and claims against investment advisers, promoters, or issuers of private offerings through AAA, JAMS, or another forum named in the governing agreement.
FINRA arbitration is one part of it — specifically, disputes with registered broker-dealers. Securities arbitration is the broader category that also covers RIAs and unregistered promoters, which don't fall under FINRA's jurisdiction. See FINRA arbitration for the FINRA-specific process.
Whether arbitration applies depends on the agreement you signed. Many advisory and private-placement contracts still include an arbitration clause — often through AAA or JAMS rather than FINRA. If there's no arbitration clause at all, the claim generally proceeds in court instead.
For FINRA claims, six years from the event under FINRA's Eligibility Rule. For claims outside FINRA, the applicable state statute of limitations for the underlying claim controls, and it can be considerably shorter — don't wait to have your situation reviewed.
VI. Two Doors, One Marketplace
If you lost money to a broker, adviser, or promoter, find out whether it holds up as a securities claim — at no upfront cost.
Securities fraud claimants are exactly the kind of volume our marketplace was built to screen and deliver.