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What are the Benefits and Limitations of Securities Mediation?

Posted on Friday, February 24th, 2017 at 1:21 pm    

When you are taking steps to recover fraudulent investment losses from a broker or firm, you have three major options for action: mediation, arbitration, and litigation. All three options have advantages and disadvantages, though one may be better than the other options depending on the details of your case.

What Is Investment Fraud Mediation?

Mediation is an informal and voluntary process in which two parties attempt to resolve the investment fraud issue with the help of a neutral third party. Mediation is flexible, creative, and cooperative, with only the two parties deciding upon a solution that is mutually amenable, guided by the mediator.

The Advantages of Investment Fraud Mediation

  • Mediation is more private. Because of its informal nature, mediation is not as public as either arbitration or litigation, which could save parties from unwanted or negative attention or from disclosing sensitive information to the public.
  • Mediation is often faster. If both parties cooperate and act in good faith, mediation can be a much faster process than arbitration or litigation. In fact, many investment fraud mediation sessions take place in a single day.
  • Mediation is often less expensive. Because it is a less complicated and shorter process, mediation is often the most economical choice.
  • Mediation offers you more control. The outcome is solely in the hands of the two parties and not in the hands of an arbiter or judge. The two parties also control the process, the cost, and the scheduling of the mediation.
  • Mediation is cooperative and positive. While litigation sets the two parties on different sides of an aisle, arguing their own points, mediation is more about finding a solution instead of discussing what went wrong. Parties also often walk away from mediation feeling more positive about the other party, which can help preserve future business relationships.
  • Mediation is flexible and creative. Because the disputing parties are in control, mediation can be creative in itself as well as offer creative solutions. Whatever the two parties agree upon can be the ideal resolution.
  • It’s okay if mediation fails. Mediation can act as a first step in the larger process of settling your dispute. If mediation fails, as it sometimes does, you may still move to another option without too much lost.

The Disadvantages of Investment Fraud Mediation

  • Both parties must agree to mediation. Unlike arbitration and litigation, mediation is completely voluntary. If one party doesn’t want to sit down at the table, mediation won’t happen.
  • Both parties must act in good faith. In mediation, it is vital that both parties are serious about finding a solution, ready to compromise when necessary, and prepared to cooperate. If one or both parties are not in that mindset, mediation will fail.
  • Mediation is unstructured. While it is easier to settle some disputes by utilizing the creativity and flexibility of mediation, other disputes might not benefit from mediation’s lack of structure.
  • Compliance can be difficult to enforce. When the two parties agree to a solution during mediation, and one party does not follow through, you will have to fall back on the other two options of arbitration or litigation anyway.

All cases are different and should be treated individually. An investment fraud attorney can review your case and help you understand which option might be the best choice for your, your case, and your needs.