FINRA Attorney
Navigating the complex world of financial regulations and disputes can be a daunting task for both investors and financial professionals. Whether you’re an investor who has suffered significant losses due to your stockbroker’s misconduct or a stockbroker facing a regulatory inquiry, a FINRA attorney can be your most crucial advocate. At Bakhtiari & Harrison, we specialize in providing expert legal representation in all matters related to the Financial Industry Regulatory Authority (FINRA). This comprehensive guide will answer your key questions about what a FINRA attorney does and how we can help you.
For investors, the sting of financial loss is often compounded by a sense of betrayal. You placed your trust in a financial professional, only to see your hard-earned money disappear due to negligence, fraud, or unsuitable investment advice. A FINRA attorney can help you understand your rights and pursue a claim to recover your losses through FINRA’s dispute resolution process.
For stockbrokers, your professional reputation and livelihood are at stake when facing customer disputes, regulatory investigations, or the complexities of transitioning between firms. A FINRA attorney can provide the guidance and defense necessary to protect your career, seek expungement of unwarranted complaints from your record, and ensure a smooth transition to a new firm.
This blog will serve as a valuable resource for both investors and brokers, offering answers to a wide array of questions that arise in the realm of FINRA law.
Frequently asked questions about the role of a FINRA attorney, categorized for investors and stockbrokers.
For Investors Who Have Lost Money
What is a FINRA attorney? A FINRA attorney is a lawyer who specializes in the rules and regulations set forth by the Financial Industry Regulatory Authority (FINRA). They represent clients in disputes and other matters governed by FINRA.
How can a FINRA attorney help me if I lost money in the stock market? A FINRA attorney can evaluate your case to determine if your losses were due to broker misconduct, such as negligence, fraud, or unsuitable investment recommendations. If so, they can help you file a claim to recover your losses.
What is FINRA arbitration? FINRA arbitration is a method of resolving disputes between investors and their brokerage firms outside of court. It is a legally binding process that is typically faster and less expensive than traditional litigation.
Do I have to go through FINRA arbitration? When you open a brokerage account, you almost always sign an agreement that includes a mandatory arbitration clause, meaning you agree to resolve any disputes through FINRA arbitration rather than in court.
What are common types of stockbroker misconduct? Common types of misconduct include unsuitable investment recommendations, churning (excessive trading), unauthorized trading, misrepresentation, and breach of fiduciary duty. A FINRA attorney can help identify if these occurred.
What does “unsuitable investment” mean? An unsuitable investment does not align with your financial goals, risk tolerance, and investment experience. Your broker has a duty to recommend only suitable investments.
What is “churning”? Churning is when a broker engages in excessive trading in a client’s account primarily to generate commissions for themselves, rather than to benefit the client.
Can I sue my stockbroker in court? In most cases, you are bound by the arbitration agreement in your account-opening documents to resolve disputes through FINRA arbitration. A FINRA attorney can advise you on the proper forum for your claim.
How long do I have to file a FINRA arbitration claim? There are statutes of limitation that apply to FINRA claims, so it is crucial to act quickly. A FINRA attorney can help you understand the specific time limits that apply to your case.
What is the first step in filing a FINRA claim? The first step is to consult with a qualified FINRA attorney. They will review your case, advise you of your options, and, if you have a valid claim, draft and file a Statement of Claim with FINRA.
What is a Statement of Claim? The Statement of Claim is the document that initiates the FINRA arbitration process. It details the facts of your case, the alleged misconduct, and the damages you are seeking.
What happens after a claim is filed? After the claim is filed, the brokerage firm will file an answer. The parties will then select arbitrators, engage in a discovery process to exchange information, and ultimately present their cases at a final hearing.
Will I have to go to a hearing? Many cases settle before the final hearing. However, if a settlement cannot be reached, you will likely need to attend a hearing to present your case to the arbitration panel. Your FINRA attorney will represent you at the hearing.
How much does a FINRA attorney cost? Many FINRA attorneys who represent investors work on a contingency fee basis, meaning they only get paid if you recover money.
What are my chances of winning a FINRA arbitration case? The outcome of any case depends on the specific facts and evidence. A skilled FINRA attorney can assess the strengths and weaknesses of your case and give you a realistic evaluation of your chances of success.
Can I recover my attorney’s fees if I win? In some cases, you may be able to recover your attorney’s fees, but this is not guaranteed.
How long does the FINRA arbitration process take? The process can take anywhere from several months to over a year to complete.
What is a FINRA arbitrator? A FINRA arbitrator is a neutral third party who hears the evidence in a case and makes a binding decision.
How are FINRA arbitrators selected? The parties are provided with lists of potential arbitrators from which they can strike and rank their choices.
Can I appeal a FINRA arbitration decision? The grounds for appealing for a FINRA arbitration award are very limited.
What is a breach of fiduciary duty? A breach of fiduciary duty occurs when a broker, who has a special relationship of trust with a client, acts in their own self-interest rather than the client’s best interest.
What should I do if I suspect my broker is engaging in misconduct? You should immediately contact a FINRA attorney to discuss your concerns.
What evidence is required for a FINRA claim? You will need documents such as account statements, correspondence with your broker, and any notes you have taken about your conversations. Your FINRA attorney will help you gather the necessary evidence.
Can a FINRA attorney help with disputes involving retirement accounts? Yes, a FINRA attorney can handle disputes related to IRAs, 401(k) plans, and other types of retirement accounts.
What is the difference between a FINRA attorney and a general practice lawyer? A FINRA attorney has specialized knowledge of the complex rules and procedures of FINRA, which is crucial for successfully navigating the arbitration process.
For Stockbrokers Seeking Representation
Why would a stockbroker need a FINRA attorney? A stockbroker might need a FINRA attorney for various reasons, including defending against customer complaints, seeking expungement of disclosures from their record, responding to FINRA regulatory inquiries, and navigating the legal aspects of transitioning to a new firm.
What is expungement? Expungement is the process of removing a customer dispute disclosure from a stockbroker’s public record, specifically their Central Registration Depository (CRD) record and BrokerCheck report.
Why is expungement necessary for a stockbroker? A clean record is vital for a stockbroker’s career. Negative disclosures can damage their reputation, make it difficult to attract new clients, and hinder employment opportunities.
What are the grounds for expungement? FINRA has specific grounds for expungement, including that the claim is factually impossible, the broker was not involved in the alleged misconduct, or the claim is false. A FINRA attorney can help determine if your case meets these criteria.
How does the expungement process work? The process typically involves filing a petition in FINRA arbitration and convincing a panel of arbitrators that expungement is warranted. If successful, you must then obtain a court order confirming the arbitration award.
Can I get a customer complaint expunged if it was settled? Yes, it is possible to get a settled complaint expunged, but you will still need to prove one of the grounds for expungement.
What is a FINRA regulatory inquiry? FINRA’s enforcement division may launch an inquiry or investigation into a broker’s conduct if it suspects a violation of FINRA rules.
What should I do if I receive a letter from FINRA’s enforcement division? You should contact a FINRA attorney immediately. Your attorney can help you understand the nature of the inquiry and formulate a response that protects your interests.
What is an On-the-Record (OTR) interview? An OTR is a formal, sworn testimony that FINRA staff may require a broker to provide as part of an investigation. It is crucial to have a FINRA attorney represent you during an OTR.
What is a Wells Notice? A Wells Notice is a letter from a regulator, such as FINRA, informing an individual that the regulator is planning to bring an enforcement action against them.
What should I do if I receive a Wells Notice? Receiving a Wells Notice is a serious matter. You should immediately retain a FINRA attorney to help you prepare a response and defend against the potential enforcement action.
What are the potential consequences of a FINRA enforcement action? Consequences can range from fines and suspensions to a permanent bar from the securities industry.
How can a FINRA attorney help with a regulatory matter? A FINRA attorney can communicate with FINRA on your behalf, help you prepare for testimony, negotiate a settlement, and defend you in a disciplinary hearing.
I’m thinking of changing firms. Why Do I Need a FINRA Attorney? Transitioning between firms can be fraught with legal and regulatory pitfalls. A FINRA attorney can help you navigate your employment agreements, non-solicitation clauses, and the transfer of your client accounts.
What is the Broker Protocol? The Broker Protocol is an agreement among many brokerage firms that allows brokers to take certain client information with them when they move to another signatory firm, without fear of being sued by their former employer.
My new firm is not a member of the Broker Protocol. What should I do? You should consult with a FINRA attorney to understand the legal risks and develop a transition plan that minimizes your exposure to a lawsuit from your former firm.
What are promissory notes or “forgivable loans”? Many firms offer upfront bonuses to transitioning brokers in the form of promissory notes. If you leave the firm before the loan is forgiven, you may be required to repay the outstanding balance.
Can a FINRA attorney help me with a dispute over a promissory note? Yes, a FINRA attorney can help you negotiate a settlement or defend you in an arbitration claim if your former firm sues you for repayment of a promissory note.
What is a Form U4 and a Form U5? The Form U4 is the registration form for brokers. The Form U5 is the termination form that a firm files with FINRA when a broker leaves.
What should I do if my former firm puts inaccurate or defamatory information on my Form U5? You can file a FINRA arbitration claim for defamation to have the information corrected and seek damages. A FINRA attorney can represent you in this process.
How can a FINRA attorney help me with my employment agreement? A FINRA attorney can review your employment agreement before you sign it to ensure you understand your rights and obligations, particularly regarding non-compete and non-solicitation clauses.
What is “gardening leave”? Gardening leave is a period during which a departing employee is still technically employed but is not allowed to work or contact clients.
Can a FINRA attorney help me negotiate the terms of my departure from a firm? Yes, a FINRA attorney can help you negotiate a separation agreement that is fair and protects your interests.
How do I choose the right FINRA attorney? Look for an attorney with extensive experience in FINRA matters, a strong track record of success, and with whom you feel comfortable communicating.
How much will it cost to hire a FINRA attorney for my defense? The cost will vary depending on the complexity of your case. Many attorneys who defend brokers charge an hourly rate.
Can I represent myself in a FINRA matter? While you have the right to represent yourself, it is highly recommended that you hire a FINRA attorney due to the specialized nature of FINRA rules and procedures.
What should I look for in a FINRA attorney’s background? Look for experience in the specific type of matter you are facing, whether it is customer disputes, expungement, regulatory defense, or broker transitions.
Will my conversations with a FINRA attorney be confidential? Yes, your communications with your attorney are protected by the attorney-client privilege.
Can a FINRA attorney help me if I am starting my career as a stockbroker? Yes, a FINRA attorney can provide valuable advice on compliance and best practices to help you avoid future problems.
What is the difference between FINRA and the SEC? FINRA is a self-regulatory organization that oversees brokerage firms and their registered representatives. The Securities and Exchange Commission (SEC) is a federal government agency that has broader oversight of the entire securities industry.
Can a FINRA attorney also represent me in an SEC investigation? Many FINRA attorneys also have experience representing clients in SEC matters.
What should I do if a customer threatens to file a complaint against me? You should document the conversation and report it to your firm’s compliance department immediately. You may also want to consult with a personal FINRA attorney.
My firm’s legal department represents me. Do I still need my own FINRA attorney? Your firm’s attorneys represent the interests of the firm, which may not always align with your personal interests. It is often advisable to have your own independent counsel.
What is a “selling away” violation? “Selling away” is when a broker sells an investment product to a client that their brokerage firm does not offer. This is a serious violation of FINRA rules.
Can a FINRA attorney help if I am accused of insider trading? Yes, a FINRA attorney can defend you against allegations of insider trading in a FINRA investigation or disciplinary proceeding.
What is the difference between mediation and arbitration? Mediation is a non-binding process in which a neutral third party assists the parties in attempting to reach a voluntary settlement. Arbitration is a more formal process where a neutral arbitrator or panel makes a binding decision.
Can a FINRA attorney represent me in mediation? Yes, a FINRA attorney can be a valuable advocate for you in mediation.
What is the Central Registration Depository (CRD)? The CRD is a database maintained by FINRA that contains the registration and disciplinary history of all registered securities professionals.
What is BrokerCheck? BrokerCheck is a free tool provided by FINRA that allows the public to research the professional backgrounds of current and former brokers and brokerage firms.
How can I get a copy of my CRD record? You can request a copy of your CRD record from FINRA.
What is a “Letter of Caution”? A Letter of Caution is a non-disciplinary letter that FINRA may issue to a broker for a minor rule violation.
Does a Letter of Caution appear on my public record? No, a Letter of Caution is not publicly disclosable.
What is an Acceptance, Waiver, and Consent (AWC)? An AWC is a settlement agreement between a broker and FINRA in which the broker accepts a finding of a rule violation and agrees to a sanction without admitting or denying the allegations.
Should I sign an AWC without consulting a FINRA attorney? No, you should always have a FINRA attorney review an AWC before you sign it to ensure you understand the terms and consequences.
Can a FINRA attorney help me negotiate the terms of an AWC? Yes, a FINRA attorney can often negotiate more favorable terms in an AWC.
What is a statutory disqualification? A statutory disqualification is a bar from the securities industry that can result from certain criminal convictions or regulatory actions.
Can a FINRA attorney help me if I am subject to statutory disqualification? A FINRA attorney can advise you on your options, which may include seeking to have the disqualification lifted.
What are some “red flags” that might indicate a FINRA investigation is coming? Red flags can include a sudden increase in information requests from your firm’s compliance department or a call from a FINRA examiner.
How can I proactively protect my career? Maintain meticulous records, communicate clearly with your clients, and consult with a FINRA attorney whenever you have a legal or compliance question.
Why should I choose Bakhtiari & Harrison as my FINRA attorney? At Bakhtiari & Harrison, we have a deep understanding of FINRA rules and a proven track record of successfully representing both investors and stockbrokers in a wide range of FINRA matters. We are dedicated to providing our clients with aggressive and effective legal representation.
Contact a FINRA Attorney at Bakhtiari & Harrison Today
Whether you are an investor seeking to recover losses or a stockbroker in need of experienced legal counsel, the stakes are too high to navigate the complexities of FINRA law on your own. The team at Bakhtiari & Harrison is here to provide the knowledgeable and dedicated representation you need. Contact us today for a confidential consultation to discuss your case.
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