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Investment and Securities Mediation: When is it Necessary and How Does it Proceed?

Wednesday, December, 19, 2012


A recent study conducted by Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms doing business in the United States, showed that 80% of all investment and securities mediations are successful in helping parties involved in investment disputes to avoid litigation.  In a time when the securities and investment field is ripe with fraud and allegations of fraud, mediation is a way to resolve a dispute fairly without the excessive cost and time involved with litigating a dispute. 

Investment and securities mediation is one of several options available for a defrauded client who is involved with a dispute with an investment advisor or brokerage firm over an investment or securities transaction (or failed transaction).  In the process of investment and securities mediation, a third-party, neutral mediator, who is an expert in investment and securities law, is hired by both parties involved in the dispute to oversee the mediation proceedings.  All stakeholders involved with the dispute are able to present their “side” in a fair and reasonable manner, without the fear of the public embarrassment and loss of reputation that is often the result of litigating a dispute. 

In investment and securities mediation, there is usually an initial meeting in which all parties involved meet together with the investment and securities mediator and each party’s counsel, if applicable, to state each side’s claim in the dispute.  The mediator then meets with each party in separate meetings to listen to the supporting evidence and claims each one has.  The mediator makes a non-binding suggested solution for each party to solve the dispute.  The parties involved in the dispute are not required to accept the solution the mediator offers and if either (or both) parties wish to pursue the dispute through litigation, they are free to do so.