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.

What is PIABA? Understanding the Public Investors Advocate Bar Association

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The Public Investors Advocate Bar Association (PIABA) is a national organization dedicated to protecting investor rights. Established in 1990, PIABA consists of attorneys who represent investors in disputes against financial firms, brokerage houses, and other institutions within the securities industry. The association’s mission is to ensure fairness in securities arbitration and litigation while advocating for regulations that protect investors.

PIABA plays a crucial role in shaping investor protection laws, educating the public on financial rights, and providing professional support to attorneys specializing in securities disputes. The organization’s members fight for investors who have suffered financial losses due to fraud, negligence, or misconduct by financial professionals.

The Mission and Purpose

The organization exists to advocate for public investors, ensuring they receive fair treatment in disputes involving securities transactions. The securities industry is complex, and many investors fall victim to misleading financial advice, unsuitable investment recommendations, and outright fraud. PIABA works to hold financial firms accountable by providing skilled legal representation to affected investors.

The organization is deeply involved in improving the legal framework governing securities disputes. It regularly engages with regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) to push for policies that enhance investor protection. Attorneys are also active in legislative advocacy, striving to influence laws and regulations that impact investor rights.

Securities Arbitration and PIABA’s Role

Most disputes between investors and financial institutions are resolved through arbitration rather than traditional litigation. FINRA oversees the arbitration process, which is often mandatory due to clauses included in brokerage agreements. While arbitration can be faster and less expensive than going to court, it is not always fair to investors. The financial industry has significant influence over arbitration procedures, creating potential disadvantages for individual investors.

PIABA works to ensure arbitration remains a fair process. The organization advocates for transparency in arbitration proceedings, improvements in arbitrator selection, and increased investor-friendly policies. PIABA attorneys have successfully represented thousands of investors in arbitration cases, helping them recover losses caused by financial firms’ wrongdoing.

Key Issues PIABA Addresses

PIABA focuses on a variety of issues related to investor protection. Some of the most common concerns the organization addresses include:

Broker Misconduct

Financial advisors and brokers are expected to act in their clients’ best interests. However, some engage in misconduct, such as recommending investments that are unsuitable for the investor’s risk tolerance or financial goals. PIABA attorneys work to hold brokers accountable for negligent or fraudulent actions.

Fraudulent Investment Schemes

Investment fraud, including Ponzi schemes and other deceptive financial practices, can lead to devastating losses for investors. PIABA attorneys help victims of fraud pursue legal action against responsible parties.

Breach of Fiduciary Duty

Certain financial professionals, including registered investment advisors (RIAs), have a fiduciary duty to act in the best interests of their clients. When they breach this duty by prioritizing their financial gain over the investor’s well-being, PIABA attorneys step in to seek justice.

Investment Product Misrepresentation

Some financial products are marketed with misleading claims or a lack of adequate risk disclosure. Investors who suffer losses due to misrepresentation can seek legal recourse with the help of PIABA attorneys.

Professional Development and Education

In addition to advocating for investors, PIABA provides professional development opportunities for attorneys specializing in securities arbitration and litigation. The association offers continuing legal education (CLE) programs, training seminars, and an annual conference where members discuss the latest trends in securities law and arbitration.

PIABA attorneys also contribute to research and publications focused on securities law. The organization publishes reports, legal analyses, and position papers to inform the public, regulators, and policymakers about investor protection issues.

Bakhtiari & Harrison’s Role in PIABA and FINRA

Ryan Bakhtiari is a well-respected attorney in the field of securities law and as the PIABA president from 2011- 2012 and a member of the Board of Directors from 2008 to 2013. As a partner at Bakhtiari & Harrison, he has represented clients in securities arbitration and litigation for many years. His extensive experience in financial disputes has made him a leading advocate for investor rights.

In addition to his involvement with PIABA, Bakhtiari has served on various regulatory committees, including the FINRA National Arbitration and Mediation Committee (NAMC). He has also contributed to industry discussions about improving arbitration practices and ensuring investor protections remain a priority.

Ryan Bakhtiari’s leadership within PIABA reflects his dedication to investor advocacy. He has played a significant role in shaping the organization’s policies and initiatives, furthering its mission to provide legal representation and protection for investors.

If you believe you have been a victim of financial misconduct, contact us at Bakhtiari & Harrison.