Introduction

Welcome to Complaints and Dispute Resolution - the unit that covers what happens when things go wrong in the securities industry, from simple trade errors to formal arbitration proceedings.

Exam Weight: Part of Function 4 (11% / ~14 questions) | Financial Industry Regulatory Authority (FINRA) Section 4.3

What You'll Learn

In this unit, you'll cover:

• Trade Errors and Corrections: How firms handle mistakes in order execution, including cancels and rebills
• Clearly Erroneous Transactions: When FINRA or an exchange can nullify trades executed at prices far from the market
• Customer Complaints: Proper handling, recordkeeping, and the consequences of getting it wrong
• Regulatory Reporting: Form U4 amendments, Rule 4530 event reporting, and key deadlines
• FINRA Investigations and Sanctions: The disciplinary process from investigation through appeal
• Arbitration: The primary dispute resolution method, panel composition, and simplified procedures
• Mediation: The voluntary alternative and how it compares to arbitration
• Litigation: When disputes go to court instead of arbitration

Why This Matters

Every registered representative will encounter trade errors, customer complaints, or regulatory inquiries at some point in their career. Knowing the correct procedures (who to notify, what records to keep, and which deadlines apply) protects both the customer and the firm. The exam tests specific thresholds, timelines, and procedural requirements that you need to know cold.

Let's start with how firms handle trade errors and corrections.