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.

Why Should You Hire a Securities Lawyer Now?

In today’s fast-paced and ever-changing financial market, the importance of hiring a securities lawyer cannot be overstated. Whether you’re a financial advisor, a small business owner, or an individual investor, navigating the complex landscape of securities law is crucial for protecting your investments and ensuring compliance with various regulations. This comprehensive guide will explore the vital role of securities lawyers, the myriad ways they can safeguard your interests, and why you should consider hiring one now.

What Is a Securities Lawyer?

A securities lawyer is a legal professional specializing in the laws and regulations governing financial securities. These include stocks, bonds, and other investment instruments. Securities lawyers play a crucial role in advising clients on compliance with both state and federal securities laws, representing them in disputes, and helping them navigate the intricate legal framework of the financial markets.

What Is Their Role in California?

In California securities lawyers are essential for ensuring that individuals and businesses comply with the state’s unique securities regulations. They assist in various legal matters, from securities offerings and compliance to litigation and dispute resolution. Their expertise in California’s securities laws is invaluable for anyone involved in the state’s financial markets.

Why Is It Important to Hire One?

Hiring a securities lawyer is vital for several reasons. They provide legal expertise, protect investors, ensure compliance with state regulations, assist with securities offerings, and offer litigation support. By hiring a securities lawyer, you can safeguard your investments, avoid legal pitfalls, and navigate the complex legal landscape of the financial markets with confidence.

Legal Expertise

Securities lawyers possess extensive knowledge of securities laws and regulations. Their legal expertise is critical for managing complex financial transactions and navigating the legal system. Here are some key aspects of their legal expertise:

Extensive Knowledge of Securities Laws

Securities lawyers are well-versed in the intricate laws and regulations governing financial markets. They stay updated on changes in securities laws and can provide valuable insights and guidance on how these laws impact your investments.

Experience with Complex Financial Transactions

Securities lawyers have experience handling complex financial transactions, including mergers, acquisitions, and securities offerings. Their expertise ensures that these transactions comply with all relevant laws and regulations, minimizing legal risks.

Ability to Navigate the Legal System

Navigating the legal system can be daunting, especially for those unfamiliar with securities laws. Securities lawyers guide you through the legal process, from filing paperwork to representing you in court, ensuring that your interests are protected at every step.

Protection for Investors

Investors face numerous risks in the financial markets, including investment fraud and misconduct by brokers or companies. Securities lawyers play a crucial role in protecting investors and ensuring that their rights are upheld.

Prevention of Investment Fraud

Investment fraud is a significant concern for investors. Securities lawyers help prevent fraud by conducting thorough due diligence, reviewing investment opportunities, and ensuring compliance with securities laws. They can identify red flags and protect you from fraudulent schemes.

Representation in Disputes with Brokers or Companies

Disputes with brokers or companies can arise for various reasons, including misconduct or breach of contract. Securities lawyers represent investors in these disputes, advocating for their rights and seeking resolution through negotiation or litigation.

Recovery of Losses Due to Misconduct

If you have suffered losses due to misconduct by brokers or companies, a securities lawyer can help you recover your losses. They investigate the circumstances of the misconduct, gather evidence, and pursue legal action to hold the responsible parties accountable.

Compliance with State Regulations

Compliance with state regulations is crucial for anyone involved in the financial markets. Securities lawyers ensure that you adhere to all relevant laws and regulations, helping you avoid legal issues and penalties.

Understanding of California’s Securities Laws

California has specific securities laws that differ from federal regulations. Securities lawyers in California have a deep understanding of these laws and can provide guidance on compliance, helping you navigate the state’s regulatory landscape.

Ensuring Compliance with State Registration Requirements

State registration requirements can be complex and vary depending on the type of securities being offered. Securities lawyers ensure that you comply with these requirements, helping you avoid legal pitfalls and ensuring that your securities offerings are legally sound.

Assistance with Filing Necessary Paperwork

Filing the necessary paperwork for securities offerings and compliance can be daunting. Securities lawyers assist with this process, ensuring that all documents are accurately completed and submitted on time, reducing the risk of legal issues.

Assistance with Securities Offerings

Securities offerings are a critical aspect of raising capital for businesses. Securities lawyers provide invaluable assistance with these offerings, ensuring compliance with laws and representing your interests in negotiations with investors.

Guidance on Compliance with Federal and State Laws

Securities offerings must comply with both federal and state laws. Securities lawyers guide you through the regulatory requirements, ensuring that your offerings meet all legal standards and helping you avoid costly mistakes.

Drafting of Offering Documents

Offering documents must be meticulously drafted to comply with securities laws and provide clear information to investors. Securities lawyers handle the drafting process, ensuring that all legal requirements are met and that your offering documents are comprehensive and accurate.

Representation in Negotiations with Investors

Negotiating with investors can be complex and challenging. Securities lawyers represent your interests in these negotiations, ensuring that your rights are protected and that the terms of the investment are fair and favorable.

Litigation Support

Securities-related lawsuits can arise for various reasons, from disputes over securities offerings to allegations of fraud. Securities lawyers provide essential litigation support, representing your interests and ensuring that you have a strong legal defense.

Representation in Securities-Related Lawsuits

Securities lawyers represent clients in securities-related lawsuits, advocating for their rights and seeking favorable outcomes. Their expertise in securities litigation ensures that your case is handled effectively and that your interests are protected.

Investigation and Gathering of Evidence

Building a strong legal case requires thorough investigation and gathering of evidence. Securities lawyers handle this process, ensuring that all relevant information is collected and that your case is supported by solid evidence.

Expertise in Securities Litigation Strategies

Securities litigation requires specialized knowledge and strategies. Securities lawyers have the expertise to develop effective litigation strategies, ensuring that your case is presented in the best possible light and that you have the best chance of success.

Key Questions Answered

In addition to understanding the role and importance of securities lawyers, it’s essential to address some common questions that clients often have.

What Is a Securities Lawyer and What Do They Do?

A securities lawyer is a legal professional who specializes in the laws and regulations governing financial securities. They advise clients on compliance with securities laws, represent them in disputes, and navigate the legal framework of financial markets.

When Do I Need to Hire a Securities Lawyer in California?

You should consider hiring a securities lawyer whenever you are involved in financial transactions, facing disputes related to securities, or need guidance on compliance with securities laws. Their expertise is crucial for protecting your investments and ensuring legal compliance.

What Types of Securities Cases Can a Lawyer Handle?

Securities lawyers handle various cases, including disputes with brokers or companies, securities fraud, compliance issues, and securities offerings. They represent clients in litigation, provide guidance on legal matters, and ensure compliance with securities laws.

How Much Does It Cost to Hire a Securities Lawyer in California?

The cost of hiring a securities lawyer in California can vary depending on the complexity of the case and the lawyer’s experience. It’s essential to discuss fees and payment structures with your lawyer to understand the costs involved.

What Are the Qualifications and Experience of a Securities Lawyer?

Securities lawyers typically have a law degree and extensive experience in securities law. They may also hold certifications or memberships in professional organizations related to securities law.

Can a Securities Lawyer Help with Both State and Federal Cases?

Yes, securities lawyers can help with both state and federal cases. They have expertise in the laws and regulations at both levels and can provide guidance and representation for various legal matters.

What Are the Potential Consequences of Securities Law Violations in California?

Violations of securities laws in California can result in severe penalties, including fines, sanctions, and legal action. It’s crucial to ensure compliance with all relevant laws to avoid these consequences.

How Long Does It Take to Resolve a Securities Case with a Lawyer?

The time it takes to resolve a securities case can vary depending on the complexity of the case and the legal process involved. Securities lawyers work to resolve cases as efficiently as possible while ensuring that your interests are protected.

What Are the Steps Involved in a Securities Case with a Lawyer?

A securities case typically involves several steps, including initial consultation, investigation, filing of legal documents, negotiation or mediation, and, if necessary, litigation. Securities lawyers guide you through each step, ensuring that your case is handled effectively.

What Are the Common Defenses Used in Securities Cases in California?

Common defenses in securities cases may include lack of intent to commit fraud, compliance with regulations, and absence of material misrepresentation. Securities lawyers develop effective defense strategies based on the specifics of each case.

What Is the Securities and Exchange Commission (SEC) and How Does It Relate to Securities Law in California?

The Securities and Exchange Commission (SEC) is a federal agency that regulates the securities markets in the United States. It plays a crucial role in enforcing securities laws and protecting investors. Securities lawyers ensure compliance with SEC regulations and represent clients in matters involving the SEC.

Can a Securities Lawyer Also Provide Guidance on Compliance and Regulatory Matters?

Yes, securities lawyers provide guidance on compliance and regulatory matters, helping clients adhere to securities laws and avoid legal issues. Their expertise ensures that you navigate the complex regulatory landscape effectively.

What Are the Ethical Standards and Obligations of a Securities Lawyer in California?

Securities lawyers in California adhere to strict ethical standards and obligations, including maintaining client confidentiality, avoiding conflicts of interest, and providing competent representation. Their ethical conduct ensures that your interests are protected.

How Can a Securities Lawyer Help with Securities Fraud Cases?

Securities lawyers play a crucial role in securities fraud cases, representing clients who have been victims of fraud and seeking to recover losses. They investigate fraud claims, gather evidence, and pursue legal action against the responsible parties.

What Are the Potential Outcomes of a Securities Case with a Lawyer in California?

The outcomes of a securities case can vary based on the specifics of the case, the evidence presented, and the legal strategies employed. Some potential outcomes include:

Settlement: Many securities cases are resolved through settlements, where the parties agree to a resolution without going to trial. This can involve compensation for losses or other agreed-upon terms.
Court Ruling: If a case goes to trial, the court will issue a ruling based on the evidence and arguments presented. This can result in compensation, penalties, or other legal remedies.
Dismissal: In some cases, the court may dismiss the case if there is insufficient evidence or legal grounds to proceed.
Regulatory Actions: Regulatory bodies like the SEC may impose sanctions, fines, or other penalties on parties found in violation of securities laws.

The Importance of Experienced Counsel

Having experienced counsel is crucial for navigating the complexities of securities law. An experienced securities lawyer brings valuable insights, strategic thinking, and a deep understanding of the legal landscape. Here’s why experienced counsel is essential:

In-Depth Knowledge of Legal Nuances

Experienced securities lawyers have a comprehensive understanding of the intricate details of securities laws. Their knowledge allows them to identify potential issues and devise effective strategies to address them, ensuring that your interests are protected.

Strategic Guidance

Navigating securities law requires strategic decision-making. Experienced lawyers provide guidance on the best course of action, whether it involves pursuing litigation, negotiating settlements, or ensuring compliance with regulations.

Strong Advocacy

In legal disputes, having a strong advocate is crucial. Experienced securities lawyers represent your interests vigorously, using their expertise to build compelling cases and advocate for favorable outcomes.

Efficient Case Management

Experienced lawyers manage cases efficiently, ensuring that all necessary steps are taken promptly and that your case progresses smoothly through the legal system. Their efficiency can help resolve cases faster and reduce legal costs.

Compliance with the Securities Act of 1933 and the Securities Exchange Act of 1934

The Securities Act of 1933 and the Securities Exchange Act of 1934 are foundational laws governing securities in the United States. Compliance with these acts is crucial for anyone involved in the financial markets.

The Securities Act of 1933

The Securities Act of 1933 focuses on the initial sale of securities, requiring issuers to provide full and fair disclosure to investors. Securities lawyers ensure that all offering documents comply with the act’s requirements, helping you avoid legal issues and protect investors.

The Securities Exchange Act of 1934

The Securities Exchange Act of 1934 regulates secondary trading of securities and established the SEC. Compliance with this act is essential for companies and individuals involved in securities transactions. Securities lawyers provide guidance on adhering to the act’s provisions and representing clients in matters involving the SEC.

Corporate Governance and Compliance

Corporate governance and compliance are critical aspects of managing a business, especially for those involved in securities markets. Securities lawyers play a vital role in ensuring that your business adheres to governance standards and complies with relevant laws.

Establishing Robust Governance Practices

Effective corporate governance involves establishing practices and policies that promote transparency, accountability, and ethical conduct. Securities lawyers assist in developing governance frameworks that align with legal requirements and best practices.

Ensuring Regulatory Compliance

Compliance with securities regulations is essential for avoiding legal issues and maintaining investor confidence. Securities lawyers help businesses understand and adhere to regulatory requirements, from filing reports to conducting audits and ensuring transparency.

Due Diligence and Investment Advising

Due diligence is a crucial step in any investment process, ensuring that all relevant information is reviewed before making decisions. Securities lawyers play a significant role in conducting due diligence and advising on investments.

Conducting Thorough Due Diligence

Securities lawyers conduct comprehensive due diligence to evaluate investment opportunities, identify potential risks, and ensure compliance with securities laws. Their diligence helps protect investors and businesses from fraudulent schemes and poor investments.

Providing Investment Advising

While securities lawyers do not replace financial advisors, they provide legal advice on investment matters, ensuring that all transactions comply with laws and regulations. Their guidance is invaluable for making informed and legally sound investment decisions.

Addressing Securities Fraud

Securities fraud is a serious issue that can have devastating financial consequences. Securities lawyers are instrumental in addressing fraud, representing victims, and pursuing legal action against perpetrators.

Identifying and Investigating Fraud

Securities lawyers identify and investigate instances of fraud, gathering evidence and building strong cases against those responsible. Their expertise ensures that all aspects of the fraud are thoroughly examined and documented.

Pursuing Legal Action

When fraud is identified, securities lawyers pursue legal action to hold the responsible parties accountable. This can involve filing lawsuits, representing clients in court, and seeking compensation for losses.

Recovering Losses

Recovering losses due to fraud is a priority for victims. Securities lawyers work diligently to recover funds through legal proceedings, settlements, or other means, ensuring that victims are compensated for their financial losses.

The Role of the SEC in Securities Law

The Securities and Exchange Commission (SEC) is a key regulatory body overseeing the securities markets in the United States. Understanding the SEC’s role and how it relates to securities law in California is crucial for anyone involved in the financial markets.

SEC’s Regulatory Authority

The SEC has broad regulatory authority over the securities markets, enforcing laws to protect investors, maintain fair markets, and facilitate capital formation. Securities lawyers ensure compliance with SEC regulations and represent clients in matters involving the SEC.

SEC Investigations and Enforcement

The SEC conducts investigations into potential violations of securities laws and can take enforcement actions against individuals and companies. Securities lawyers represent clients during SEC investigations, providing legal defense and negotiating settlements or penalties.

SEC Filings and Reporting

Companies and individuals involved in securities must comply with various SEC filing and reporting requirements. Securities lawyers assist with preparing and submitting these filings, ensuring accuracy and compliance with regulations.

Navigating Securities Litigation

Securities litigation involves legal disputes related to securities transactions, fraud, and other issues. Securities lawyers are essential for navigating litigation, providing representation, and developing effective legal strategies.

Developing Litigation Strategies

Effective litigation strategies are crucial for success in securities cases. Securities lawyers develop tailored strategies based on the specifics of each case, ensuring that your legal position is strong and well-supported.

Representing Clients in Court

Representation in court requires specialized legal knowledge and skills. Securities lawyers represent clients in securities litigation, advocating for their interests and seeking favorable outcomes.

Resolving Disputes

Not all securities cases go to trial. Securities lawyers often resolve disputes through negotiation, mediation, or arbitration, achieving settlements that protect their clients’ interests without the need for prolonged litigation.

In today’s ever-changing financial market, the importance of hiring a securities lawyer is clear. Whether you’re a financial advisor, small business owner, or individual investor, navigating the complex landscape of securities law requires expertise, strategic thinking, and robust legal representation. Securities lawyers provide invaluable services, from ensuring compliance with laws and protecting against fraud to representing clients in disputes and litigation.

By hiring a securities lawyer, you can safeguard your investments, navigate legal challenges with confidence, and ensure that your financial interests are protected. At Bakhtiari & Harrison, we are committed to providing the legal support you need to succeed in the financial markets. Contact us today to learn more about how we can assist you.

For more information on how we assist investors and businesses with securities law, contact Bakhtiari & Harrison visit or call (310) 499-4732. To understand our services in addressing investment fraud, check out our Investment Fraud section.