Securities arbitration may be subject to limitations period

Readers of this Florida securities fraud blog often learn about disputes involving allegations of stockbroker misrepresentations or alleged misconduct amounting to a breach of fiduciary duty. Financial Industry Regulatory Authority (“FINRA”) arbitration is the primary resolution process available to investors who believe they have been wronged by their brokerage firm or financial advisor. Simply defined, arbitration is a private dispute resolution method that parties agree to in writing, in lieu of pursuing dispute resolution in a public court proceeding.

FINRA arbitration decisions that resolve disputes between investors and their stockbrokers and brokerage firms typically are binding, meaning that the parties contractually agreed to give up their right to have the dispute decided by a court of law. 

A recent ruling by the Florida Supreme Court has breathed some level of court procedure into the FINRA process, however. Specificaly, Florida’s high court has ruled that statutes of limitation can also apply in the securities arbitration proceeding. Statutes of limitation prescribe how long a party has to bring claims against another party.  The failure to bring a claim within the requisite limitations period could prevent a party from bringing the claim at all. As a result, investors could be left without a remedy if they wait too long before filing a complaint with FINRA. For this reason, investors who believe they are victims of misrepresentation, negligence, or fraud by their stockbroker or brokerage firm should consult with a securities fraud attorney at the earliest opportunity.

Source: reuters.com, “Florida court rules state time limits apply to securities arbitration,” May 16, 2013