What Disputes Are Eligible for Arbitration?
In considering whether to initiate arbitration, it is important to keep
in mind that, generally, a public customer has a right to require a
broker/dealer to submit for arbitration only disputes relating to or
arising out of the business activities of the broker/dealer.
When deciding where to file your claim, you should determine which
self-regulatory organization (SRO) supervises the markets where the
transaction occurred or the securities are listed. The Uniform Code
provides that an SRO may, with the consent of the claimant, refer a
case to the appropriate forum where the transaction occurred or the
securities are listed.
An additional factor to be noted is that a controversy is not eligible
for submission to arbitration if six or more years have elapsed from
the date of the event giving rise to the dispute. The arbitrators also
may dismiss a claim barred by shorter applicable state or federal
statutes of limitations. If there is a question about the statute of
limitations, you should consult an attorney.
Even after a customer has signed the agreement to arbitrate, the
customer may request either the sponsoring organization or the
arbitrators to permit that customer to proceed with his or her claim in
court. The customer should be aware, however, that in most cases the
sponsoring organization and the arbitrators will retain jurisdiction
and proceed with the arbitration.
A newly adopted section of the Uniform Code states that a claim
submitted as a class action shall not be eligible for arbitration. The
rule also sets forth the circumstances where a claim encompassed by a
putative or certified class action may or may not be eligible to be
filed in arbitration. For further guidance you should refer to the rule
and discuss its application to a particular case with the staff of the
SRO where you intend to file your claim.