What type of claims are arbitrated?
Since the vast majority of arbitration claims are filed with the NASD, now known as FINRA, this article will focus on the rules and procedures adopted by FINRA. Almost any type of customer complaint relating to the brokerage account must be submitted to arbitration. The most common types of misconduct include: unsuitable recommendations, churning (excessive trading) and misrepresentations (failure to disclose important information about the investment). Also, due to recent economic developments, there has been an increase in customer complaints relating to: the mishandling of employee stock options, the excessive use of margin loans to finance stock purchases, and the over-concentration of assets in high-technology stocks.
