The SEC cannot act on behalf of a party (such as individual investors) in any arbitration proceeding and cannot overturn or change an arbitration panel's decision. In addition, arbitration decisions are not subject to appeal. You can, however, file a motion to vacate, which essentially asks the court to “cancel” the panel’s decision. The circumstances under which state or federal courts can grant a motion to vacate are typically very limited. For more information, please go to the Federal Arbitration Act and click on §10.
If you decide to challenge an arbitration decision in federal court, the Federal Arbitration Act (FAA) requires you to act quickly. Under the FAA, you must file a motion to vacate within three months of the date the arbitrator filed or delivered the decision. Some states may have arbitration statutes that require you to file the motion in even less time.
Although the SEC cannot help individual investors with challenging an arbitration decision, we appreciate hearing your concerns about the fairness and efficiency of the arbitration process. We oversee the arbitration programs conducted by self-regulatory organizations, such as FINRA Dispute Resolution. Your views can help us make sure that the process runs more smoothly and fairly. Please visit our Complaint Center to send us your feedback.
Use of Confidentiality Provisions in Arbitration
Broker-dealers cannot use confidentiality provisions to prohibit or restrict an individual from communicating with the Commission, FINRA, or other federal or state regulatory authority regarding a possible securities law violation. More specifically, FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) prohibits broker-dealers from using confidentiality provisions in settlement agreements, discovery stipulations in arbitration proceedings, or any other documents that prohibit or restrict a customer or any other person from communicating with the Commission, FINRA, or any federal or state regulatory authority regarding a possible securities law violation.
