FINRA Arbitration Awards – Will I Recover My Losses?

October 25th, 2016 by


Are you an investor considering suing your stockbroker, brokerage firm, or financial advisor in a FINRA arbitration? You probably want to know if you can expect to recover any losses, and if so, how much. While the answer mostly depends upon your individual circumstances, this article will provide an overview of FINRA arbitration awards.

The parties settle most cases.

Based upon statistics published by FINRA, the parties have reached a settlement in 61% of all customer arbitration cases resolved this year. A settlement almost always results in the investors receiving some money from the respondents in exchange for dismissing the case. Because settlements are typically confidential, there are no reliable statistics available regarding how much investors recover of their claimed losses. At Halling & Cayo, our experience shows that a settlement amount can range anywhere from 10% to 200% of a client’s claimed losses, with most settlements falling somewhere in the 40% to 80% range.

Arbitrators decide less than 25% of the cases.coins-currency-investment-insurance

So far this year, arbitrators have decided 22% of all resolved FINRA cases. In 2015, they decided 24%. Of the arbitrator decisions this year, 80% were decided after a hearing. Hearings almost always include testimony by the investor, the broker, and other involved individuals. The arbitrators decided the other 20% of cases after a review of documents and written arguments. This usually happens when the claimed losses are not large enough to warrant an in-person hearing under FINRA rules.

Arbitrators award damages in less than half of the cases they decide.

In the customer cases that have been decided by arbitrators this year, the investor has been awarded damages 41% of the time. The rate has fluctuated between 38% and 45% in recent years. However, a study published by the American Bar Association in 2013 found that arbitrators were much more likely to award damages when investors were represented by experienced securities fraud attorneys.

When arbitrators do award damages, it is usually less than half of the amount sought.

FINRA publishes all arbitrator awards online, but it does not compile statistics on the size of the awards in customer cases. However, several independent studies have revealed that when arbitrators do award damages, the median amount awarded is less than half of the amount sought by the investors. The 2013 study referenced above found that the median recovery rate in a “customer win” was 37% of the amount sought. Similarly, a survey of awards from 2007-2013 found that in cases claiming damages between $25,000 and $1,000,000, the median award in a “customer win” case was 38% of the claim amount. Interestingly, the study found that when the dollar amount limits were removed, the median award increased to 47%. This is likely explained by the  increased chance of a large award in extreme cases.

Final Thoughts

Anybody thinking about suing their stockbroker or brokerage firm should keep in mind two important considerations:

  1. Claims with merit are more likely to be settled. Common sense says that if a stockbroker or brokerage firm thinks they might lose a case at hearing, they will be more likely to try to settle the case. As a result, the above statistics on arbitrator awards include a disproportionate number of cases with little-to-no merit. A free consultation with an experienced securities fraud attorney will allow you to receive an opinion on whether your potential claims have merit.
  2. Hiring an experienced securities fraud attorney increases your likelihood of recovery. As discussed in the 2013 study published by the American Bar Association, it pays to hire an experienced attorney. In cases decided by arbitrators, investors represented by PIABA attorneys were over 30% more likely to receive an award than investors represented by other attorneys, and more than twice as likely to receive an award as investors not represented by an attorney. Experienced attorneys will also be able to maximize settlement amounts as a result of their familiarity with FINRA rules and procedures.

If you have a dispute with your stockbroker, brokerage firm, or investment advisor, contact the experienced securities fraud attorneys at Halling & Cayo by calling (414) 271-3400, or emailing Patrick O’Neill at [email protected].


Patrick is a trial attorney with a practice focused on securities, business, and real estate litigation. He routinely represents clients in federal court, state court, and arbitration forums.
Email Patrick: [email protected]