
If investors have evidence that a broker is involved in misconduct in handling their investment, mediation may be recommended to resolve the dispute. Mediation is a dispute resolution process that is more of a negotiation than a judgment.
It is typically a pre-hearing dispute resolution process, as the outcome is considered a mere proposal that either party can reject. It is, however, faster and less expensive than arbitration or litigation.
In mediation, the parties control:
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Mediators employ different approaches to help the parties resolve their disputes. They are;
This is a form of mediation where the mediator does not offer any opinion but serves as an intermediary between the parties communicating their demands, offers, and counteroffers.
In this case, the mediator will guide them to reach a middle ground.
In evaluative mediation, the mediator determines the issue and demands for supporting evidence from each party.
The mediator will evaluate each party’s strengths and weaknesses to offer an opinion on the likely outcome of the dispute if they insist on proceeding to arbitration or a court of law.
Securities Arbitration and Mediation are both means of resolving securities trading issues between brokerage firms and investors. The major difference between the two is that the awards rendered in arbitration are final, while parties can dispute the settlement in mediation.
Arbitration awards are also more likely to come with an official punishment, such as suspension of license, while mediation settlements are often monetary.
There are four major processes of mediation:
FINRA’s Mediation Program is guided by its Code of Mediation Procedure which states;
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