Securities Brokerage Dispute Mediation

Sep 3 • Business • 451 Views • Comments Off on Securities Brokerage Dispute Mediation

Mediation is much gentler than arbitrage, usually a person that is hired to resolve a conflict between two different groups. There is a skill to mediation as it depends closely on the mediator’s ability to listen, observe clients’ needs, and find a way for both parties to come to an agreement. One such example is securities brokerage dispute mediation. If you would like to learn what it is, take a look at the questions and answers below.

Securities Brokerage Dispute Mediation

What Exactly is Securities Brokerage Dispute Mediation?

Securities brokerage dispute mediation is a new approach of mediation between opposing clients. The mediator with these finite set of skills resolves the issues as a representative of the Office of Dispute Resolution of the Financial Industry Regulatory Authority (FINRA).

What are the Implications of Mediation?                 

The FINRA has reflected through studies and observation that when a skilled mediator is sent in to resolve an issue between two parties, the mediation process ends up being more beneficial for the parties. The most obvious factor is that there are not nearly as many arbitration fees (such as hearing session fees), and there are not as many expert witness fees. The opposing parties like spending less money on the mediator, and by making the process move along that much more smoothly, experts find that clients are more likely to move from and to heal from conflicts.

Do Mediations End Well?

Since a mediator is often a person who looks out after the interest of both parties fairly, mediation typically ends in a 85% success rate. In these cases, investors agree to the settlement eventually, and they agree to settle their claims with brokerage firms.

Who are the Mediators?

Perhaps one of the reasons why mediation has such a high success rate is because the mediators themselves understand the business. In fact, most mediators through the FINRA are experienced business people, and include professionals who have worked as brokerage firm managers, attorneys, judges, and sometimes accountants. Because these mediators have experience with and know intimately the business of these brokerage firms, clients are more likely to trust these mediators as they feel compassion from them.

How are Mediation and Arbitrage Different?

Arbitrage is typically known as something of a hostile takeover: often the opposing interested party will buy out shares in the interest of overwhelming the original brokerage firm. Mediation is much different from arbitrage. First of all, mediation is done by a third, unrelated, outside party. Second of all, arbitrage takes over the brokerage without caring about settlements, whereas mediation strives to make the sell-out more bearable to the brokerage. Often this is the best option for the firm as mediation does not force them out.

The business world can be a difficult place. Brokerage firms often don’t want to be muscled out of their business by either arbitrage or mediation. But if the firm is being taken over, at least through mediation, a third party member can objectively do what is right in that situation, leaving the brokerage firm with a settlement that makes the situation much easier to bear.

My name is Geoff Leary and I wanted to build rocket ships, but I’m settling for being a freelance writer here in Upstate New York. I like to take action & make inspiration. I write about a range of topics, just to keep things crispy and fresh.

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