FINRA Rule 2268: Required Disclosures and Prohibited Terms

FINRA Rule 2268 governs the predispute arbitration agreements that brokerage firms ask customers to sign when opening an account. It does three things: it lists the disclosures the agreement has to contain, it dictates how the firm presents and delivers the document, and it bars provisions that would cut into your rights. A firm that gets any of this wrong risks discipline from FINRA and may find the agreement unenforceable against the customer.¹

Disclosures the Agreement Must Contain

Immediately before the arbitration clause itself, the agreement has to include a highlighted, outline-form set of disclosures. These are the specific warnings FINRA requires so a customer understands how arbitration differs from litigation.²

The agreement must tell you:

All parties are giving up the right to sue in court or demand a jury trial, except where the forum’s rules allow court filing.
Arbitration awards are generally final, and courts rarely overturn or modify them.
Discovery is more limited than it would be in a lawsuit.
The arbitrators do not have to explain their decision unless all parties jointly request an explained decision at least 20 days before the first hearing.
A minority of the arbitrators on the panel may be people affiliated with the securities industry.
The arbitration forum may impose time limits on filing a claim, and a claim not eligible for arbitration may still be brought in court.
The forum’s rules, including any future amendments, are incorporated into the agreement.

All seven disclosures have to appear together, in that highlighted block, right before the arbitration clause.²

How the Firm Has to Present and Deliver the Agreement

Directly above the signature line, the agreement has to carry a separate highlighted statement noting that the document contains an arbitration clause, along with the exact page and paragraph where you can find it. The point is that you can’t miss the clause even when signing a thick stack of account paperwork.²

After you sign, the firm has 30 days to give you a copy. You have to acknowledge receipt, either by signing the agreement itself or by signing a separate receipt. The rule doesn’t say whether that has to happen on paper or electronically, so either works as long as the acknowledgment is documented.²

Getting a Copy Later

If you ask for a copy of your arbitration agreement after account opening, the firm has 10 business days to provide one. If it no longer has a copy, it has to tell you so within the same window. You can also ask the firm to identify all arbitration forums where you could file a claim under the agreement, along with contact information, and the firm has to comply.²

This matters more than it sounds. Disputes often surface years after the account is opened, and customers frequently don’t have the original paperwork. A firm can’t stall when the disagreement gets serious.

What the Agreement Cannot Contain

Rule 2268 draws hard lines around clauses that would chip away at your rights. An agreement can’t include any provision that:²

Contradicts or limits the rules of FINRA or any other self-regulatory organization.
Restricts your ability to file a claim in arbitration, or in court where the forum’s rules permit it.
Limits what the arbitrators can award. They must remain free to grant any relief they find appropriate, so damage caps and bars on particular types of awards are out.

Statute of Limitations

The agreement can’t be used to shorten or extend the legal deadline for bringing a claim. If the law gives you three years, the firm can’t quietly cut that to one, and it can’t require a court rather than the arbitrators to decide whether the deadline has passed.¹

Separately, FINRA’s arbitration rules impose their own eligibility cutoff: no claim can be submitted to arbitration if more than six years have passed since the event that gave rise to it. That runs independently of any statute of limitations.

Hearing Location

The agreement can’t dictate where the hearing takes place. Under FINRA’s rules, the Director of Dispute Resolution Services picks the location, and any clause that tries to override that choice is non-compliant.¹

Class Action Carve-Out

One of the strongest protections in the rule is that firms cannot use the arbitration clause to keep you out of a class action. Every agreement has to state that the firm will not enforce arbitration against a customer who has filed a class action in court, or who is a member of a putative class that hasn’t been dismissed.²

Arbitration only becomes enforceable against a class member if:

The court denies class certification.
The class is decertified.
The customer is excluded from the class by the court.

The practical effect: brokerage firms cannot insert class action waivers into their customer agreements. Any language that would block you from joining or participating in a class action violates the rule.¹

If a Firm Doesn’t Comply

A firm that ignores Rule 2268 is exposed on two fronts. FINRA can bring disciplinary action for the rule violation itself. And a customer stuck with a non-compliant agreement has grounds to challenge its enforceability, arguing that an agreement missing required disclosures or containing prohibited provisions shouldn’t bind them to arbitration.¹

If you think your firm’s arbitration agreement doesn’t meet these requirements, you can file a complaint through FINRA’s investor complaint process.³