Taking a Broker to Arbitration

If you have a problem with your investment broker and you cannot resolve the dispute on your own, you probably won’t get your day in court. But you will be heard, most likely in a conference room somewhere, before a panel of arbitrators. The moment people open a brokerage or investment account, they most likely — and perhaps inadvertently — waive their right to sue. The fine print of most customer agreements almost always contains a clause that says the customer agree to resolve any future disputes through arbitration, largely through the forum operated by the Financial Industry Regulatory Authority, Wall Street’s self-regulatory organization, known as Finra. The mandatory nature of these agreements — which are increasingly appearing in other consumer financial products as well and have been repeatedly blessed by the Supreme Court — is a frequent complaint of consumer advocates. And if you try to avoid brokers’ so-called predispute arbitration clause, you may have little choice but to stow your savings in a mattress. More in the New York Times here.