Securities claims subject to arbitration proceedings are subject to the same statute of limitations as any other judicial action. In holding that section 95.011, Florida Statutes, applies to arbitration proceedings, the Florida Supreme Court effectively cut the time investors have to file a claim by up to two-thirds.
Using statutory interpretation, the Florida Supreme Court in Raymond James Fin. Servs., Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013), concluded that the Florida Legislature intended to subject arbitration proceedings to Florida’s general statute of limitations set forth in chapter 95 of the Florida Statutes. The Court determined the applicability of section 95.011 to “civil actions” should be broadly defined to encompass all civil proceedings, which includes arbitration
Securities arbitration is the primary way that investors seek redress against financial advisors for improper investments. Typically, the claims include fraud, breach of fiduciary duty, unsuitability, breach of contract, or negligence. Prior to this decision, the Financial Industry Regulatory Authority (“FINRA”) set the time limit for parties who contractually agreed to settle disputes through arbitration at six years. Following the Raymond James holding, however, the time limitation set forth in section 95.11 controls. Now, pursuant to section 95.11(4)(e), an “action founded upon a violation of any provision of chapter 517” (governing securities transactions) must be brought within two years from when the party discovered or should have discovered the violation. The statute of limitation for negligence is a bit longer, at four years pursuant to § 95.11(3)(a). Additionally, financial institutions should recognize that while a violation under chapter 517 must be filed within two years after being discovered, investors are capped at a five-year maximum from the date the violation occurred. Fla. Stat. § 95.11(4)(e).
The Raymond James decision is far reaching as it applies to arbitration proceedings in general, not just in the context of securities disputes. Therefore, parties seeking to resolve claims through arbitration should understand that their claims are subject to the same statutes of limitations as any other civil action or proceeding in Florida.
