How Do I Sue My Stock Broker?
Filing a lawsuit against your stock broker generally must be done in Financial Industry Regulatory Authority (FINRA) arbitration. This is because nearly all stock brokers, and the brokerage firms they work for, include a mandatory arbitration clause into their customer service agreements and contacts. The U.S. Supreme Court decided in the 1980's that these types of mandatory arbitration provisions are legal and enforceable.
You may be thinking that stock brokers forcing customers to give up their right to sue in state or federal court just doesn't seem fair. We'd agree.
That being said, filing a lawsuit against a stock broker in FINRA arbitration is less expensive and time consuming than state or federal courts. Generally only taking 18 months or less. In state and federal courts, cases can drag out for 5-10 years or longer.
While FINRA arbitration is not perfect, it is generally the best venue for customers seeking to recovery investment losses caused by their stock broker.