Definition of Code of Arbitration Procedure

The Code of Arbitration Procedure is the FINRA bylaw that provides for a forum for dispute resolution relating to industry matters. All industry participants must arbitrate a public customer must agree to arbitration in writing.

Applying "Code of Arbitration Procedure" to Securities Exams:

Arbitration is used to settle monetary disputes. Arbitration will result in a decision that is final, binding and may not be appealed for any reason. Once a person has entered the financial industry, at the time they sign and submit their U4 form, they have agreed to settle any and all disputes in arbitration. A customer must agree to settle any dispute through arbitration in writing. Most firms have customers sign a customer agreement at the time they open an account. The customer agreement usually contains a pre dispute arbitration clause. The only industry matter that cannot be forced into arbitration is a matter regarding harassment or discrimination, in these matters the parties must specifically agree to go to arbitration.

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