Define: Securities Dispute Resolution: Enforcing Awards

In the event of a dispute between investors and a brokerage firm or licenced broker, FINRA arbitration can be utilised for resolution. If the investor prevails, they will receive a monetary award that must be paid within 30 days. Failure to pay may result in the investor seeking enforcement of the award through the court system. However, the opposing party may contest the award within 30 days, requesting that the court vacate it. The court will only do so if there is evidence of corruption, unfairness, or arbitrator overreach, which is difficult to prove and therefore rare. The time limit for vacating an award is three months, while the time limit for enforcing an award is one year.

Investors who win awards in FINRA arbitration must be paid within thirty days. If the opposing party fails to make the payment, the investor has the option to seek enforcement of the award through the courts. The Federal Arbitration Act allows for the enforcement of arbitration awards. The losing party has a thirty-day window to request the court to vacate the arbitration award. Unless the court finds any of the specified grounds for refusal or deferral of recognition or enforcement of the award outlined in §10 of the Federal Arbitration Act, the award will be confirmed. For instance, if an investor is awarded $100,000 in FINRA arbitration, the opposing party must make the payment within thirty days. Failure to do so allows the investor to pursue enforcement of the award through the courts. The court will confirm the award unless there is evidence of corruption, fraud, undue means, or if the arbitrators exceeded their authority. Another scenario is if the opposing party declares bankruptcy or decides to exit the securities industry. In such cases, the investor may not receive their award, even if they win in arbitration. However, they can still seek enforcement of the award through the courts, although the collection may not be possible if the opposing party lacks the necessary funds. These examples demonstrate how investors can turn to the courts for enforcement of their awards if the opposing party fails to make the payment. While the Federal Arbitration Act allows for the enforcement of arbitration awards, there are limited grounds for vacating an award. Consequently, courts rarely vacate an award.

This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 17th April 2024.