The simple answer is that arbitration is an alternate forum to resolve disputes between parties. Instead of judges or juries, arbitrators decide if wrongdoing occurred and how to correct or compensate you for it. When the arbitration is over, the decisions of the arbitrators are final. If you are unhappy with the result, you cannot go to court to try again. The arbitrators' decisions can only be vacated under very limited circumstances—for example, if you can demonstrate arbitrator bias or fraud in the arbitration proceeding.  If you want to vacate an arbitrator's decision you must do so within three months or less in a "motion to vacate."

If you have a brokerage account, you probably signed an agreement that requires you to settle any disputes with your broker through arbitration rather than the courts. Time is of the essence. To take advantage of your legal rights, you must take legal action promptly or you may lose the right to seek a remedy or recover funds. Time restrictions, called "statutes of limitations," vary from state to state and from claim to claim.

The majority of arbitration claims are filed with the NASD. The remaining claims are filed with the exchanges, particularly the New York Stock Exchange. You'll find a wealth of information on arbitration—including rules, how to start a proceeding, and downloadable forms—at the website of the NASD.

To learn more about arbitration call us at 1-800-294-9198, or contact us online.