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.

Broker-Dealer Representation – Advocates in the Broker-Dealer Industry

At Bakhtiari & Harrison, we provide broker-dealer representation and legal services for the securities industry including officers, directors, registered representatives and other employees. We provide counsel through every step of Broker-Dealer operations, from setting up your compliance frameworks to managing complex legal challenges. We understand the broker-dealer sector deeply, which lets us help you navigate the tricky world of financial regulations confidently.

Our goal in providing broker-dealer representation is to ensure you operate within legal limits while protecting your business interests and helping you grow. We focus on keeping you compliant, managing your business risks, and helping you handle emerging market challenges effectively.

What Do Broker-Dealers Do?

Broker-Dealers are vital in the securities markets. They bridge buyers and sellers, provide investment advice, and manage client portfolios. This dual role means they must follow strict regulatory requirements, which include detailed compliance protocols and operational rules.

Broker-Dealers are vital to making markets work well. They help keep markets liquid and efficient but face many legal duties and are closely watched by regulatory groups such as the SEC (Securities and Exchange Commission) and FINRA (Financial Industry Regulatory Authority). Broker-Dealers face many legal and regulatory challenges:

They must continuously follow securities laws and rules.
They need strong defenses against any claims of unfair sales practices.
They must manage regulatory investigations by groups like FINRA and the SEC and respond to Wells Notices.
They need skilled broker-dealer representation in state regulatory investigations and enforcement actions.
They must handle arbitration and other dispute resolutions effectively.
They must navigate complex employment law issues, including contract talks and disputes.

These challenges require a legal partner who understands the laws and how Broker-Dealers operate.

Meet Our Partners: Ryan Bakhtiari and David Harrison

Ryan Bakhtiari

Ryan Bakhtiari is a past member and Chair of FINRA’s National Arbitration and Mediation Committee (NAMC) which makes rules, policy and procedure for broker-dealer, employment and customer disputes heard by FINRA arbitrators. Mr. Bakhtiari also served as a board member and President of PIABA (Public Investors Arbitration Bar Association). His extensive experience in securities law and understanding of FINRA’s regulatory framework make him uniquely qualified to handle complex investigations and ensure your rights are protected.

David Harrison

David Harrison brings a wealth of litigation experience to the table. His career includes time at the District Attorney’s Office, where he developed his litigation skills, and as in-house counsel at Morgan Stanley Dean Witter, where broker-dealer represention was part of his core work at the firm. David also held a Series Seven license from his time at Shearson Lehman Brothers, further enhancing his understanding of the financial industry and its regulatory demands.

Together, Mr. Bakhtiari and Mr. Harrison provide innovative legal solutions and anticipate shifts in the industry, preparing our clients for what lies ahead.

Broker-Dealer Representation, Services We Provide

We offer a range of legal services designed for Broker-Dealers:

Regulatory Compliance and Defense: We create and maintain compliance programs that meet SEC and FINRA standards. Broker-dealer representation includings defending Broker-Dealers in investigations and managing state and federal regulatory inquiries.
Litigation and Arbitration: We defend against sales practice complaints and manage disputes in various settings. We handle arbitration processes to resolve conflicts favorably for our clients.
Risk Management: We develop strategies to identify and reduce operational and financial risks. Our proactive steps protect you from unexpected problems and strengthen your market position.
Employment Law: We guide you on employment contracts and strategic staffing decisions. We also defend you in employment-related disputes, ensuring your practices meet legal standards and support your business goals.

For more information concerning areas of routine broker-dealer representation:

Why Choose Bakhtiari & Harrison?

Bakhtiari & Harrison are more than legal advisors—we are your strategic partners in the financial services industry and provide broker-dealer representation. We tackle your immediate and long-term legal needs, ensuring you thrive in today’s complex financial markets. As regulations change and new challenges arise, we stay committed to providing advanced legal solutions that strengthen your position in the market.

Broker-Dealers looking for a legal team that offers energetic advocacy and forward-thinking strategies will find unmatched expertise and commitment at Bakhtiari & Harrison. We are ready to support you through legal challenges, bringing clarity and security to an industry known for constant change and strict oversight. If you seek top flight broker-dealer representation please contact us.

Broker-Dealer Representation