when an investor or broker has a specific dispute with a broker that is registered with finra they may file a claim with finra that states the alleged misconduct and the amount of money they are seeking in damages 
finra will appoint a panel of three financial industry professionals who unless the injured party requests otherwise will not be employed in the securities industry this is intended to eliminate bias but if one of the parties suspects that a member of the panel is biased they may request a change arbitration hearingsfor disputes involving less than 50 000 in person hearings are not considered necessary rather both parties submit written materials to a single arbitrator who decides the case for disputes ranging from 50 000 to 100 000 in person hearings with a single arbitrator are the most common for disputes over 100 000 in person hearings with three arbitrators are standard a majority of the three arbitrator panel that is two people is necessary for a decision arbitrators are not required to explain their decision parties filing for arbitration may represent themselves or they may hire an attorney in general arbitration panels are less formalistic than the court system so investors have a reasonable chance of being successful even when representing themselves there are fees associated with filing for arbitration not to mention the time and travel expenses involved which investors should consider when pursuing this option special considerationsarbitration panels do not necessarily award the full amount sought in a dispute for example if an investor files a claim against his or her broker for 38 000 the panel may decide in the investor s favor but only award 10 000 arbitration decisions are binding and not subject to appeal except under very limited circumstances finra s mediation process on the other hand is not binding unless both parties agree to the settlement the public investors arbitration bar association has criticized finra for lack of diversity on its arbitration panels and lax safeguards against bias and conflicts of interest the regulator has argued that these criticisms are misplaced particularly the focus on arbitrators age in their terms of service most brokers require investors to agree to mandatory arbitration to settle potential disputes rather than going to court since finra has a near monopoly on arbitration the organization s panels are many investors only recourse 