What is the relationship between securities arbitration and mediation?

Securities arbitration and mediation are both forms of alternative dispute resolution. Alternative dispute resolution (ADR) is a way for two or more parties to resolve a dispute without going to court. In securities arbitration, an investor who has been wronged may bring a claim against a broker, dealer, investment advisor, or other person associated with the security market. The investor files a claim with FINRA, an organization which handles arbitration of disputes involving investment products, accounts, and services. A panel composed of at least three FINRA arbitrators hears both sides of the dispute and makes a ruling. The ruling by the panel is typically binding and the parties must comply with the decision. Mediation is another type of ADR. In mediation, a neutral third-party mediator facilitates communication between the two parties in order to guide them toward a mutually acceptable resolution. Mediation is non-binding so both parties may agree to the resolution or not, in which case the dispute can still be pursued in court. The major distinction between securities arbitration and mediation is that arbitration is binding, while mediation is not. Furthermore, in arbitration the decisions are made by a panel of arbitrators, while in mediation the parties work with the mediator to reach a resolution. Both arbitration and mediation can help the parties to a securities dispute avoid the costs and delays associated with a court trial.

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What is the relationship between securities arbitration and mediation?

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