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SIE practice questionhardIndustry Arbitration

A dispute arises between two FINRA member firms regarding a trade settlement. Under FINRA rules, how must this dispute be resolved?

  1. AFINRA mediates the dispute but cannot compel a resolution
  2. BThe dispute must be submitted to FINRA arbitration✓ Correct answer
  3. CThe firms may choose litigation or arbitration at their discretion
  4. DThe SEC resolves all inter-firm disputes directly
Explanation

Why B — The dispute must be submitted to FINRA arbitration

Under FINRA Rule 13200 (Industry Code), disputes between FINRA member firms or between associated persons of different member firms must be arbitrated through FINRA's dispute resolution forum. This is mandatory — unlike customer arbitration where the predispute agreement drives the requirement, industry arbitration is required by FINRA membership rules. The parties do not have the option to choose litigation instead for matters covered by the Industry Code.

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