Arbitration case filings through December 2017 reflected a 6 percent decrease compared to cases filed in 2016 during the same time frame.  More specifically, 3,681 cases were filed in 2016, but 3,456 cases were filed in 2017.  Of the 3,456 cases filed, 65 percent or 2,260 were customer disputes and 35 percent or 1,196 were intra-industry disputes. 

Customer claims decreased by 10 percent from 2016 to 2017.  Cases proceeding through FINRA’s mediation program increased 4 percent from 2016.  Approximately 82 percent of these cases concluded with successful settlements, with the average turnaround time being 105 days.  In cases that went to a final arbitration hearing with a panel, claimants were awarded damages 43% of the time, which was 2 percent more than in 2016.

The top controversy types in customer arbitrations filed in 2017 were: breach of fiduciary duty; misrepresentation; negligence; failure to supervise; suitability; omission of facts; fraud; and breach of contract.  The top security types in customer arbitrations filed in 2017 were: common stocks; municipal bonds; municipal bond funds; mutual funds; government securities; limited partnerships; and REITs.

Panels were more likely to award damages to claimants in cases that went to final arbitration in 2017 than in 2016.  However, it is encouraging to see that arbitration case filings and customer complaints decreased in 2017, especially considering the increase in 2016 that disrupted the sustained decrease that has occurred over the previous few years. 

As in years past, mediation and early resolution of arbitration cases in FINRA continues to be the norm rather than the exception.  Given these statistics, we continue to emphasize to our broker dealer clients the importance of supervision and to our registered representative clients the importance of documentation.  Having proper mechanisms in place for both of these ensures a stronger defense during mediation and arbitration.