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.

Nevada Investment Fraud Lawyer, Securities Attorney, SEC & FINRA Securities Law Firm

Nevada investment fraud lawyers of Bakhtiari & Harrison are focused on the representation of Nevada based clients in complex arbitration, litigation, and related legal services in matters involving the securities industry. The firm’s partners have extensive experience in securities, employment and regulatory matters. Our focus is on delivering strategic and creative client-centric solutions. Nevada investment fraud lawyers at Bakhtiari & Harrison assist investors in recovering thier financial losses.

Nevada Investment Fraud Lawyers at Bakhtiari & Harrison Represent Clients In Litigation and Arbitration Regarding the Securities Industry

We represent individuals and institutions in securities arbitration and litigation claims before FINRA (Financial Industry Regulatory Authority, AAA (American Arbitration Association) and other arbitration providers.

How a Nevada Investment Fraud Lawyer Can Help You

If you are located in Nevada, have experienced financial loss, and are searching for an investment fraud lawyer, Bakhtiari & Harrison may be able to assist you. We represent Nevada based investors and clients with these and other types of investment fraud and financial advisor misconduct cases. Nevada investment fraud lawyers at Bakhtiari & Harrison assist investors in recovering thier financial losses.

Understanding Nevada Securities Code Violations in Trading Securities

In the complex world of securities trading, adherence to legal and ethical standards is paramount. Nevada has established a robust legal framework to ensure the integrity of its financial markets and protect investors from malpractices. This blog post will delve into some common violations under the Nevada Securities Code, including suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business advantage.

Offer, Sale and Purchase of Securities in Nevada

NRS 90.570 governs the ethical and legal conduct associated with the offer, sale, and purchase of securities in Nevada. This statute explicitly prohibits individuals from engaging in fraudulent activities. Firstly, it forbids employing any device, scheme, or artifice to defraud.

Secondly, it prohibits making untrue statements of material facts or omitting necessary material facts that would render other statements misleading under the given circumstances.

Lastly, it disallows engaging in any act, practice, or course of business that operates, or would operate, as a fraud or deceit upon any person. These provisions are designed to maintain the integrity of securities transactions and protect investors from deceptive practices.

Duties and Fidudiciary Duties of Broker-Dealears and Sales Representatives in Nevada

NRS 90.575 outlines the fiduciary duties of broker-dealers, sales representatives, investment advisers, and their representatives in Nevada. It mandates that these financial professionals must not violate their fiduciary duty towards clients as imposed by NRS 628A.020. The Administrator has the authority to define or exclude specific acts, practices, or courses of business as violations of this fiduciary duty through regulation. Additionally, the Administrator can prescribe methods designed to prevent these financial professionals from engaging in conduct that violates their fiduciary obligations. This statute ensures that fiduciary duties are upheld, safeguarding clients’ interests in financial transactions.

Market Manipulation under Nevada Securities Law

NRS 90.580 addresses the prohibition of market manipulation in Nevada. This statute, reinforcing the general principles of NRS 90.570, prohibits several specific deceptive practices. It forbids quoting fictitious prices for securities and executing transactions that do not alter the beneficial ownership of a security to create a false impression of market activity. Nevada investment fraud lawyers at Bakhtiari & Harrison reprresent investors. Additionally, it prohibits placing orders to buy or sell securities with the knowledge that matching orders will be made to fabricate the appearance of active trading.

It also bans the use of any deceptive or fraudulent schemes to manipulate the market and the dissemination of false or misleading information about publicly traded securities. However, transactions and conduct that comply with the Securities Exchange Act of 1934 and the regulations of the Securities and Exchange Commission are exempt from these prohibitions. Nevada investment fraud lawyers employ the statute to ensure the integrity and transparency of the securities market, protecting investors from fraudulent activities.

Prohibited Securities and Fraudulent Activity under Nevada Securities Laws

NRS 90.590 explicitly prohibits certain fraudulent activities by investment advisers and their representatives in Nevada. It is unlawful for these individuals, whether acting directly or indirectly, to employ any device, scheme, or artifice to defraud a client. Additionally, they must not engage in any act, practice, or course of business that operates, or would operate, as a fraud or deceit upon a client. Nevada investment fraud lawyers at Bakhtiari & Harrison reprresent investors. This statute ensures that investment advisers adhere to high ethical standards, protecting clients from deceptive and fraudulent practices in their financial dealings.

Common Code Violations in Trading Securities

Several other common violations under relate to trading securities, including:

Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, violating fiduciary duties which can violate Nevada securities laws.
Front-Running: Brokers executing orders on a security for their own account while taking advantage of advance knowledge of pending orders from their customers, which can violate Nevada Securities laws.
Ponzi Schemes: Investment frauds that pay returns to earlier investors from the new capital contributed by newer investors, rather than from profit earned, falling under fraudulent schemes addressed by Nevada securities laws. Nevada investment fraud lawyers at Bakhtiari & Harrison will work tirelessly to help you recover your financial losses.
Insider Trading: Trading a public company’s stock or other securities based on material, non-public information about the company, violating fair market practices under Nevada securities laws.
Failure to Supervise: Supervisors failing to adequately oversee the actions of brokers, leading to various forms of misconduct, which can violate Nevada securities laws.

Clients Should Contact Our Experienced Nevada Investment Fraud Lawyers

Nevada Investment Fraud Lawyer

If you’ve been the victim of investment fraud, contact the securities fraud attorneys of Bakhtiari & Harrison for a free initial consultation. We represent victims of financial and investment disputes throughout Nevada, including Carson City, Churchill County, Clark County, Douglas County, Elko County, Lyon County, Nye County, Washoe County and cities including Henderson, Las Vegas, Reno, Sparks. Nevada investment fraud lawyers at Bakhtiari & Harrison will work tirelessly to help you recover your financial losses.