What is FINRA arbitration?

FINRA arbitration is a method of resolving disputes between investors and brokerage firms or financial advisors outside the court system. It involves a neutral third party, an arbitrator, who reviews the case and makes a binding decision.

Why choose arbitration over litigation?

Arbitration is typically faster, less formal, and more cost-effective than litigation. It also provides a final resolution to disputes, with limited grounds for appeal. Most relationships with financial advisors are formalized by entering into a contract which contains a dispute resolution clause. Nationally, most dispute resolution clauses provide for FINRA arbitration.

Who can file a FINRA arbitration claim?

Investors, brokerage firms, and financial advisors can file a FINRA arbitration claim if they have a dispute related to securities or investment activities. FINRA arbitration is normally the forum for disputes among registered persons, brokerage firms and the public customer clients of the firms.

How do I start the FINRA arbitration process?

To start the arbitration process, Bakhtiari & Harrison will file a Statement of Claim with FINRA, detailing the nature of the dispute, the parties involved, and the relief sought.

What is a Statement of Claim?

A Statement of Claim is a written document submitted by the claimant outlining the facts of the dispute, legal claims, and the desired outcome.

What happens after filing the Statement of Claim?

After filing, the respondent has 45 days to answer the Statement of Claim. The answer must address the claims and may include counterclaims or other relief sought.

What fees are involved in FINRA arbitration?

Fees include filing fees, hearing session fees, and possibly member surcharges or process fees, depending on the specifics of the case.

Can I represent myself in FINRA arbitration?

Yes, you can represent yourself, but many choose to hire an attorney with experience in securities arbitration due to the complexity of the process. Investors and industry professionals who choose to represent themselves do so at a substantial disadvantage, Wall Street firms typically retain experienced professional counsel to represent their interests.

How are arbitrators selected?

Arbitrators are selected through the Neutral List Selection System (NLSS), which provides a list of potential arbitrators. Both parties rank and strike names to agree on a panel.

What qualifications do FINRA arbitrators have?

FINRA arbitrators include attorneys, accountants, financial professionals, and public members who have undergone training and meet FINRA’s qualification standards.

How long does the arbitration process take?

The process typically takes 12-18 months from filing to the final award, but this can vary based on case complexity and scheduling. Preference may be given to investors that are seriously ill or elderly.

What is a prehearing conference?

A prehearing conference is a meeting between the parties and the arbitrators to discuss procedural issues, set a schedule, and address preliminary matters including final FINRA arbitration hearing dates.

What is discovery in arbitration?

Discovery is the exchange of documents and information between the parties to prepare for the hearing. It is more limited than in litigation.

What happens during the arbitration hearing?

During the hearing, both sides present evidence, call witnesses, and make arguments. The arbitrators then deliberate and render a decision.

Is the arbitration hearing open to the public?

No, arbitration hearings are private and confidential. Only the parties, their representatives, and the arbitrators may attend.

Can I settle my case before the hearing?

Yes, parties can settle at any time before the arbitrators render a decision, often through negotiation or mediation.

What is mediation in the context of FINRA arbitration?

Mediation is a voluntary process where a neutral mediator helps the parties negotiate a settlement. It is separate from arbitration and non-binding.

What happens if I lose in arbitration?

If you lose, the arbitrator’s decision is final and binding. There are limited grounds for challenging the award in court.

Can I appeal an arbitration decision?

Generally, you cannot appeal an arbitration decision. However, you can seek to vacate the award on very narrow grounds, such as arbitrator misconduct.

What types of disputes are resolved through FINRA arbitration?

Disputes include claims of fraud, breach of fiduciary duty, negligence, breach of contract, and other issues related to securities and investments.

How are damages determined in arbitration?

Damages are determined based on the evidence presented, including financial records, expert testimony, and the specifics of the case.

Can arbitrators award attorney’s fees?

Arbitrators can award attorney’s fees if provided for by law, contract, or if both parties request it.

How do I enforce an arbitration award?

An arbitration award can be enforced in court through a confirmation process, making it a judgment that can be collected.

What is expungement in FINRA arbitration?

Expungement is the process of removing information from a broker’s record on the Central Registration Depository (CRD) system. It is only granted under specific conditions.

What are the grounds for vacating an arbitration award?

Grounds for vacating an award include arbitrator bias, fraud, corruption, or misconduct, as well as exceeding their powers.

Are arbitration awards public?

Yes, arbitration awards are published on FINRA’s website, providing transparency and access to past decisions.

What is the role of the Office of Dispute Resolution?

The Office of Dispute Resolution administers arbitration and mediation cases, ensuring that the process runs smoothly and efficiently.

What is a Simplified Arbitration?

Simplified Arbitration is for cases involving claims of $50,000 or less, allowing for a quicker and less expensive resolution without a hearing.

Can I request an expedited hearing?

Yes, in certain circumstances, such as elderly or seriously ill parties, you can request an expedited hearing.

What is the role of an arbitrator?

An arbitrator acts as a neutral decision-maker, reviewing evidence, hearing testimony, and issuing a binding decision on the dispute.

How do I prepare for an arbitration hearing?

Preparation involves gathering evidence, preparing witnesses, and developing a clear case strategy to present to the arbitrators.

What types of evidence are admissible in arbitration?

Evidence can include documents, emails, financial records, expert reports, and witness testimony, subject to the arbitrators’ discretion.

Can I request documents from the other party?

Yes, through the discovery process, you can request relevant documents and information from the other party to support your case.

How does FINRA handle conflicts of interest with arbitrators?

FINRA requires arbitrators to disclose any potential conflicts of interest, and parties can object to arbitrators they believe are biased.

What happens if a party does not comply with discovery?

If a party does not comply, the other party can file a motion to compel, asking the arbitrators to order compliance and possibly impose sanctions.

What is a motion in arbitration?

A motion is a formal request for the arbitrators to make a ruling on a specific issue, such as compelling discovery or dismissing a claim.

Can I request interim relief in arbitration?

Yes, you can request interim relief, such as temporary restraining orders or injunctions, to preserve the status quo pending the final decision.

How are hearing locations determined?

Hearing locations are typically determined by the location of the claimant unless both parties agree to a different venue.

What is a telephonic or virtual hearing?

Telephonic or virtual hearings are conducted via phone or video conference, allowing parties to participate remotely.

How are arbitration awards paid?

Awards are typically paid by the losing party within 30 days of the decision, unless otherwise specified by the arbitrators.

What if the losing party does not pay the award?

If the losing party does not pay, you can seek enforcement through the courts, turning the award into a legally enforceable judgment.

Are there any limits on the types of claims I can bring in arbitration?

FINRA arbitration covers a broad range of claims related to securities, but there are some statutory and regulatory limits on certain types of claims.

Can I bring a class action in FINRA arbitration?

No, class actions are not permitted in FINRA arbitration. However, you can join other claimants in a single arbitration if the claims are similar.

What is the role of expert witnesses in arbitration?

Expert witnesses can provide specialized knowledge and opinions to help explain complex financial issues to the arbitrators.

How are hearing dates scheduled?

Hearing dates are scheduled based on availability of the parties and arbitrators, with consideration for the complexity of the case.

Can I request a different arbitrator if I believe one is biased?

Yes, you can challenge an arbitrator if you believe they have a conflict of interest or bias that affects their impartiality.

What is a “chairperson” in a FINRA arbitration panel?

The chairperson is the lead arbitrator who manages the procedural aspects of the case and ensures the hearing runs smoothly.

How does FINRA ensure fairness in arbitration?

FINRA has rules and procedures in place to ensure a fair and impartial process, including arbitrator training and disclosure requirements.

How do I learn more about the FINRA arbitration process?

For more information, you can visit FINRA’s website, contact their Office of Dispute Resolution, or consult with experienced attorneys like those at Bakhtiari & Harrison.

How can Bakhtiari & Harrison help with FINRA arbitration?

Bakhtiari & Harrison can assist with filing claims, responding, selecting arbitrators, discovery, hearings, and ensuring the best possible outcome through skilled representation and strategic advice.

Understanding Crypto: A Comprehensive Guide to Digital Currency

In recent years, Crypto has revolutionized the financial world, offering a decentralized alternative to traditional money. Whether you’re a seasoned investor or just starting to explore digital assets, understanding Cryptocurrency is crucial in today’s economy. This guide will walk you through the fundamentals of Cryptocurrency, how it works, and why it’s becoming an integral part of modern finance.

Table of Contents

What is Crypto?

Cryptocurrency is a digital or virtual currency that uses cryptographic techniques for security, making it nearly impossible to counterfeit. Unlike traditional fiat currencies, which are regulated by governments and central banks, Cryptocurrency operates on a decentralized network based on blockchain technology.

How Does It Work?

At the core is blockchain technology. A blockchain is a distributed ledger that records all transactions across a network of computers. This decentralized system ensures that no single entity has control over the currency, making it more secure and transparent than traditional financial systems.

When you make a Crypto transaction, it is verified by network participants (often called miners or validators) through complex mathematical computations. Once validated, the transaction is added to the blockchain, making it permanent and immutable.

Types

There are thousands of different assets available today, each serving different purposes. Here are some of the most well-known:

Bitcoin (BTC): The first and most widely recognized Crypto, often referred to as digital gold.
Ethereum (ETH): A blockchain platform that enables smart contracts and decentralized applications (dApps).
Ripple (XRP): Primarily used for fast and low-cost international transactions.
Litecoin (LTC): Created as a “lighter” version of Bitcoin with faster transaction speeds.
Stablecoins: USDT (Tether) and USDC, which are pegged to the value of traditional currencies like the US dollar.

Why is Cryptocurrency Popular?

Several factors contribute to the growing popularity:

Decentralization: Unlike traditional banks, it operates on a peer-to-peer network without intermediaries.
Security: Advanced encryption and blockchain technology make transactions secure.
Transparency: Every transaction is recorded on a public ledger, ensuring accountability.
Inflation Resistance: Many like Bitcoin, have a fixed supply, making them less susceptible to inflation compared to fiat currencies.
Financial Inclusion: It provides access to financial services for people without traditional banking access.

The Risks of Investing

Despite its advantages, it is not without risks. Here are some challenges to consider before investing:

Volatility: Prices can be highly unpredictable, leading to significant gains or losses.
Regulatory Uncertainty: Governments around the world are still determining how to regulate it.
Security Risks: While blockchain itself is secure, individual wallets and exchanges can be vulnerable to hacks.
Lack of Consumer Protection: Unlike traditional banks, there is no government-backed insurance for holdings.

How to Buy and Store

Buying Cryptocurrency

Choose an Exchange: Platforms like Coinbase, Binance, and Kraken allow users to buy and trade.
Create an Account: Sign up and complete identity verification to comply with regulations.
Deposit Funds: You can use bank transfers, credit cards, or even other Cryptos to fund your account.
Purchase: Select the token you want to buy and complete the transaction.

Storing

Once you purchase a coin, you need a secure place to store it. There are two main types of wallets:

Hot Wallets: Online wallets connected to the internet, such as mobile apps and web-based services. While convenient, they are more vulnerable to cyberattacks.
Cold Wallets: Offline wallets, such as hardware or paper wallets, which provide better security for long-term holdings.

The Future of Finance

The influence extends beyond digital currency. Many industries are exploring blockchain applications to enhance security, efficiency, and transparency. Here are some key trends shaping the future of Crypto:

Decentralized Finance (DeFi): DeFi platforms allow users to lend, borrow, and trade without relying on banks.
Non-Fungible Tokens (NFTs): Digital assets that represent ownership of unique items like art, music, and collectibles.
Central Bank Digital Currencies (CBDCs): Governments are considering digital versions of their fiat currencies to compete.
Corporate Adoption: Major companies, including Tesla and PayPal, are integrating into their payment systems.

Regulation: What You Need to Know

Regulatory approaches vary by country. Some nations have embraced digital currencies, while others have imposed restrictions. Key regulatory considerations include:

Taxation: Many governments require Crypto investors to report their holdings and pay capital gains taxes.
Anti-Money Laundering (AML) Laws: Exchanges must comply with AML and Know Your Customer (KYC) regulations.
Securities Laws: Some tokens may be classified as securities, subjecting them to additional regulations.

As regulations continue to evolve, staying informed is essential for anyone involved in the Crypto market.

Is Cryptocurrency a Good Investment?

Cryptocurrency has proven to be a lucrative investment for many, but it is not without risks. Before investing, consider the following:

Diversification: Never invest more than you can afford to lose. Diversifying your portfolio reduces risk.
Research: Understand the technology, use cases, and market trends before investing.
Security Measures: Use strong passwords, two-factor authentication, and cold storage to protect your assets.
Long-Term vs. Short-Term Strategy: Determine whether you want to trade actively or hold as a long-term investment.

Navigating the World of Crypto

Cryptocurrency is reshaping the financial landscape, offering both opportunities and challenges. Whether you’re interested in investing, trading, or simply learning more about digital assets, understanding the fundamentals is key.

If you have questions about Cryptocurrency regulations, investment strategies, or legal considerations, Bakhtiari & Harrison is here to help. Our experienced team can provide guidance tailored to your financial goals. Contact Bakhtiari & Harrison today to navigate the complexities of Crypto related disputes, we represent investors in FINRA arbitration and in state and federal court.