Securities Arbitration Advice
Securities arbitration is a difficult subject depending on the circumstances. I prefer not to give specific legal advice. But, I can say something for when a company is facing an arbitration about a securities-related claim.
The first thing I would do is protect all the data that’s out there. I would freeze all the data or electronically-stored information. Then I would sequester it in a place where the chain of custody is not interrupted, to make sure to delete nothing. You could have some important information there. It could be important to a claim or defense and the business should maintain that.
The second thing I’d do is seek excellent counsel to assist the business owner further. In particular, about what arbitration means. About the consequences of an arbitration. Also, selecting an arbitration, the arbitrator, and that whole process. Which you could write books about, because it’s an interesting science.
Defending an Allegation
How to proceed with prosecuting or defending an allegation and arbitration is unique. That is because it’s a formal process but it also has some expedited dynamics. It also depends on the type of forum you’re in, whether it’s before the AAA or JAMS or FINRA. There’s a lot of analysis and decision making that needs to happen. That’s why an important relationship between the CEO and her or his legal advisor is critical.
Sometimes you must decide whether to go into or opt out of an arbitration proceeding. You may attempt to prosecute or defend a claim in state or federal court or any court for that matter. That’s an important, critical decision. You should analyze this in turn with your legal advisor. There’s a lot of different factors to consider. Some of those factors, without being exhaustive or providing specific advice, would be:
- The nature of the claim
- Whether the forum would be friendly to that claim
Defense Claims are Better for Arbitration
There’s a connotation that defense claims are better for arbitration. That is because arbitrators are more conservative than juries, for example. There’s also the fact that going to court instead of arbitration would be more expensive. It would be more time-consuming than an arbitration. There’s another stereotype that arbitrators are more intelligent triers of fact than juries. That’s not always the case.
There is some specific analysis and decision-making that you should do with your legal advisor. In my experience, when I’ve had to face that with a client, it’s a long process. That is because you are deciding all the consequences that arise out of going to arbitration. Or you are trying to resist arbitration and then figuring out what to do in light of that analysis.
Improving the Speed of Securities Arbitration
Here is some advice on handling securities cases in arbitration. One area that there could be an improvement is the speed of getting arbitration. It should be set on a calendar and expediting arbitration. The whole purpose of arbitration is to have a neutral fact-finder render a decision. This must happen in a manner as expedient and as cost-effective as possible.
It’s generally true that arbitration is faster than court proceedings. Yet, sometimes arbitration can get bogged down. In particular because of scheduling or cost issues. In my view, a way to hurry that process as much as possible benefits all parties. That is true whether it’s the defendant or the plaintiff in that type of a case.
