New York, NY securities attorney Jenice L. Malecki talks about how AAA differs from FINRA arbitrations. She states that AAA (American Arbitration Association) arbitrations differ from FINRA arbitrations in several ways. While both involve filing a complaint, participating in discovery, and ultimately attending a hearing, AAA arbitrations tend to involve highly qualified arbitrators—but they are also significantly more expensive. Many investors prefer FINRA arbitration, particularly if they have already suffered financial losses, because it can be more accessible and cost-effective.

A notable advantage of FINRA arbitration is that if a respondent fails to pay an arbitration award, they risk losing their license, which creates a strong incentive for compliance. Collection issues are therefore rare in FINRA cases. Additionally, every FINRA arbitration is reviewed by FINRA’s regulatory enforcement arm, which can encourage firms to settle disputes to avoid further scrutiny. These factors make FINRA arbitration a practical and effective forum for investors seeking recovery.