FINRA’s Mediation Process

Mediation can be initiated two ways with FINRA: either before a dispute enters an arbitration, or while the dispute is still going through the arbitration process.  

If a dispute is already in arbitration, one or both parties can contact their arbitration administrator about their desire to mediate. FINRA staff will contact the other side to see if they agree to mediate the dispute. If desired, FINRA staff will see if the other party is interested in mediation without revealing any interest by the opposing party. If the parties agree to mediate, the case will proceed with mediator selection. Often times, the parties submit their agreement to mediate within a postponement notice. However, the arbitration and mediation processes may proceed on a parallel track.

If there is a dispute which is not yet in arbitration, one of the parties can directly request mediation. This is called a “straight-in mediation request.” Once the request is submitted, FINRA will send the request to the named party asking for a response and/or agreement to mediate the dispute. If there is an agreement to mediate, the case will proceed with mediator selection. If there is not an agreement, the requesting party can decide if it is appropriate to file an arbitration claim at that time.

Upon agreement, FINRA staff will begin by putting together a list of FINRA-approved mediators and scheduling the session. Both parties will also be introduced, usually in writing, to their Mediation Administrator, and find out how to contact staff.

Selecting the Mediator

After conferring with the parties, FINRA will send a list of proposed mediators from its roster. The mediators on the list may have subject-matter expertise or other experience that is consistent with the parties' needs in the case.

FINRA will include a disclosure report for each mediator on the provided list. The disclosure report contains the mediator's rate (hourly fee or flat fee), any travel or cancellation policies, educational and employment experience, type of cases mediated, the number of cases mediated and how many settled, all of which help the parties select the mediator who best meets their needs.

The parties may select their mediator from the initial list FINRA sends or may ask for additional lists. The parties may also agree to mediate with a FINRA-approved mediator by advising the mediation staff at any time during the process.

Once the mediator has been selected, the parties to the dispute and the mediator are required to sign a Mediation Submission Agreement.

The agreement confirms that parties will mediate in accordance with FINRA Mediation Rules and agree to the terms of payment for applicable fees and the confidentiality of the mediation process.

Scheduling the Mediation Date

The mediation may be held in person, telephonically or by video conference. FINRA staff is available to help schedule the mediation date and coordinate the location and format with the parties and mediator. The parties also may schedule the mediation directly with the mediator and provide the necessary information to FINRA staff. Mediations usually take one day, and the date and format are agreed upon by all participants.

Unlike in arbitration, mediators can speak directly to and privately with the parties. Therefore, prior to the mediation session, the mediator may choose to speak with the parties individually to become knowledgeable about the details about the case. The mediator also may request a summary or history of the dispute, arbitration pleadings (if available) or other documents that help tell the story of the dispute.

The purpose of the mediation session is for the parties to work toward a possible settlement. The mediator’s role is to guide the parties toward their own resolution. Through joint sessions and separate caucuses with the parties, the mediator helps both sides define the issues clearly, understand each other’s positions and move closer to resolution. The mediator has no authority to decide the settlement or even compel the parties to settle.

At the mediation, the mediator may begin with a joint session, to set the ground rules and an agenda, including introductions and if agreed upon parties will present opening statements. The opening statements will provide the parties an opportunity to explain the client’s position and interest.

Generally, after the opening statement, the mediator will move the parties into individual caucuses, which are private meetings with one party at a time. The mediator will ask questions, speak at length about the issues at hand, and carry messages, such as offers, counter offers, demands or proposals between the parties to help facilitate a resolution. The mediator will speak with the parties candidly about settlement expectations and will help the parties see the strengths and weaknesses of the case.

The majority of FINRA mediations conclude with a settlement between the parties. While mediation is non-binding, once parties sign a settlement agreement, the agreement is final and enforceable.

At the conclusion of the mediation, the mediator will provide FINRA’s Mediation Administrator a mediator payment form, which will reflect the case status, and the allocation of mediation fees.

If there is a pending arbitration case, the Claimant is responsible for advising the arbitration Case Administrator.

Settlement

A settlement occurs if the parties resolve their dispute.

When the parties reach an agreement, they are responsible for recording the settlement in writing. The mediator may help the parties determine who is documenting the terms of the settlement, even if it is handwritten, and have the parties execute the agreement. This agreement may be finalized formally at a later date.

Impasse

An impasse occurs if the parties do not settle their dispute.

Since mediation is non-binding, there are times when the parties decide not to settle. Or they resolve only part of the case in mediation by narrowing some of the issues. In those instances, claimants maintain their right to file an arbitration claim or proceed with an existing arbitration case.

Regardless of whether the parties agree to settle, feedback from users of FINRA's mediation forum indicates that their mediation experience has prepared them to pursue or continue in arbitration because they have a better understanding of their case.