Elizabeth Del Cid Talks Securities Arbitration

Why did the securities industry designate arbitration as its preferred dispute resolution process?

Arbitration has existed as a dispute resolution mechanism for over 200 years. In 1987, there was a sharp increase in securities arbitration following the U.S. Supreme Court decision in Shearson v. McMahon, 482 U.S. 220 (1987). The Shearson decision helped establish arbitration as the mandated procedure for resolving securities disputes, which were subject to an enforceable arbitration agreement.

What has been the experience of parties from Latin America in securities arbitration?

The Financial Industry Regulatory Agency (“FINRA”), which handles more than 99% of the securities-related arbitrations in the U.S. and Puerto Rico, collaborates with international regulators in Latin America to support and improve oversight of broker dealers in other countries. Partnerships with FINRA have been formed in Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Peru, and Venezuela.

FINRA has tried to universalize the rules of securities arbitration. In general, parties from Latin America should be familiar with arbitration agreements, no depositions, a list of documents that each side is required to produce in a case, and the binding effect of arbitration awards.

How can securities arbitration improve the dispute resolution process in Latin America?

Benefits of pursuing securities arbitration in Latin America over other means of dispute resolution such as the traditional court route are having decision makers in the field with securities expertise, prompt and efficient resolution of a case, and awards that are final and binding.

Securities arbitration can improve the dispute resolution process in Latin America by showing that parties can be involved in selecting the arbitrators, there is no need for an appeal process, and a case can be resolved fairly and inexpensively without the need of an extended jury trial.

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