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.

Winning Strategies for Expunging Your FINRA Record

Winning Strategies for Expunging Your FINRA Record

Introduction

Having a blemish on your FINRA record can have serious consequences for your career as a financial advisor. Such marks can affect your ability to gain new clients, secure employment opportunities, and maintain a positive reputation in the industry. However, there are strategies you can employ to expunge negative marks from your record and protect your reputation

Strategy 1: Review Your FINRA Record

The first step in expunging your FINRA record is to carefully review the information that is currently on it. This involves obtaining a copy of your record from the Central Registration Depository (CRD) system, which FINRA manages. Go through each entry meticulously and make note of any inaccuracies or discrepancies that need to be addressed. Understanding the specifics of the marks against you is crucial for building a strong case for expungement.

Pay particular attention to details such as dates, descriptions of incidents, and the nature of any customer dispute or regulatory action. Ensuring that all the information is accurate and up-to-date is the foundation upon which your expungement case will be built.

Strategy 2: Gather Supporting Evidence

Collecting supporting evidence is a critical part of the expungement process. Evidence may include documentation, witness statements, or other relevant information that can substantiate your claim that the marks on your record are incorrect or unjust.

Documentation could involve emails, transaction records, internal reports, and any other relevant paperwork that can demonstrate your side of the story. Witness statements from colleagues, clients, or supervisors who can provide context and support your version of events are also valuable. The goal is to compile a comprehensive and compelling set of evidence that clearly shows why the information on your FINRA record should be expunged.

Strategy 3: Determine Eligibility for Expungement

Before proceeding with expungement, it is important to determine if you are eligible for this process. Not all marks on a FINRA record are eligible for expungement, and the criteria can be quite stringent. Consulting with a legal expert who specializes in FINRA cases is essential to assess your eligibility.

Eligibility typically hinges on whether the mark is factually impossible, clearly erroneous, or if you were not involved in the alleged misconduct. Understanding FINRA Rule 2080 is crucial here, as this rule outlines the specific circumstances under which expungement can be granted. A legal expert can help you interpret this rule and evaluate whether your case meets the necessary criteria.

Strategy 4: Prepare a Strong Petition

Drafting a strong petition is a pivotal step in the expungement process. Your petition should clearly outline the reasons why you believe the information on your FINRA record should be expunged. This document must be thorough, well-organized, and persuasive, as it will serve as the primary basis for your request.

Include all supporting evidence and documentation gathered in Strategy 2. Your petition should tell a cohesive story that explains the context of the incident, highlights any inaccuracies, and demonstrates why expungement is justified. Clarity, detail, and a strong factual basis are key components of an effective petition.

Strategy 5: File Your Petition with FINRA

Once your petition is ready, the next step is to file it with FINRA along with all the necessary documentation. This involves submitting your petition to the appropriate FINRA office and ensuring that all required forms and fees are included.

Be prepared to wait for a response, as the review process can take some time. FINRA will evaluate your petition and determine whether it meets the criteria for an expungement hearing. During this waiting period, it’s important to stay proactive and follow up with FINRA as needed to check on the status of your petition.

Strategy 6: Attend the Expungement Hearing

If your petition is accepted, you may be required to attend an expungement hearing. This hearing is your opportunity to present your case directly to an arbitration panel. Preparation is crucial for this stage.

During the hearing, you will need to present your evidence, answer questions from the panel, and address any concerns they may have. It’s important to practice your testimony and be ready to articulate clearly and confidently why the expungement is warranted. Your legal counsel can play a vital role in preparing you for this hearing and ensuring that you present the strongest possible case.

Strategy 7: Address the Opposition

Sometimes, there may be opposition to your expungement request. This opposition could come from a customer who filed a dispute, a former employer, or other parties involved in the incident. It’s crucial to be prepared to address any objections or counterarguments they might raise.

Provide additional evidence or arguments to support your case. This might involve presenting further documentation, calling additional witnesses, or offering new insights that can help counter the opposition’s claims. Addressing and rebut any opposition effectively can significantly strengthen your case.

Strategy 8: Follow Up with FINRA

After the expungement hearing, it is important to follow up with FINRA to ensure that the necessary steps are being taken to expunge the information from your record. This involves staying in contact with FINRA representatives and monitoring the progress of your expungement request.

Timely follow-up can help address any additional requirements or documentation that FINRA might request. It also shows that you are diligent and committed to clearing your record, which can positively influence the outcome of your request.

Strategy 9: Update Your BrokerCheck Report

Once your FINRA record has been expunged, make sure to update your BrokerCheck report to reflect the changes. BrokerCheck is a public tool provided by FINRA that allows investors to check the background of brokerage firms and financial professionals. Ensuring that your BrokerCheck report accurately reflects your expunged record is crucial for maintaining your reputation in the industry.

Updating your BrokerCheck report helps protect your professional standing and ensures that clients and potential employers see an accurate and clean record. This step is vital for fully reaping the benefits of the expungement process.

Strategy 10: Be Proactive in Protecting Your Record

Finally, be proactive in protecting your record moving forward. Stay informed about FINRA regulations and make sure to adhere to them to avoid any future issues. Regularly review your FINRA record and BrokerCheck report to ensure that all information is accurate and up-to-date.

Implement best practices in your professional conduct to prevent any actions that could lead to future marks on your record. By maintaining high ethical standards and staying informed about regulatory changes, you can safeguard your professional reputation and avoid the need for future expungements.

The Role of FINRA in Expungement

Understanding FINRA’s Policies and Procedures for Expungement

FINRA has specific policies and procedures that govern the expungement process. Understanding these rules is essential for navigating the process successfully. FINRA Rule 2080 is a key regulatory authority that outlines the criteria and procedures for expungement. This rule specifies the circumstances under which a record can be expunged and ensures that the process is fair and transparent.

The Role of the Central Registration Depository (CRD)

The CRD is a database that contains information about registered securities employees. It plays a central role in the expungement process, as expunged records are removed from the CRD. The CRD system is managed by FINRA and serves as a repository for information on registered representatives. Ensuring that your record is clean in the CRD is crucial for maintaining a good professional reputation in the brokerage industry.

FINRA Rule 2080: Essential for Expungement

FINRA Rule 2080 is the key regulatory authority governing the expungement process. This rule outlines the criteria and procedures for expunging customer dispute information from a financial professional’s record. Under FINRA Rule 2080, expungement can only be granted if the claim is factually impossible or clearly erroneous, or if the professional was not involved in the alleged misconduct. Understanding FINRA Rule 2080 is crucial for anyone seeking expungement, as it ensures that only eligible cases are considered. Compliance with FINRA Rule 2080 is essential to navigate the expungement process successfully. Working with an attorney knowledgeable about FINRA Rule 2080 can significantly enhance your chances of a successful outcome. Keeping abreast of any updates or changes to FINRA Rule 2080 is also important, as this can affect your eligibility and the overall process.

The Expungement Hearing: A Crucial Step

The expungement hearing is a vital part of the FINRA expungement process. During this hearing, an arbitration panel reviews your request for expungement and evaluates the evidence you provide. This is your opportunity to present your case, explain the context of the incident, and demonstrate your efforts to improve since the event occurred. Preparing thoroughly for the expungement hearing is essential. You will need to practice your testimony, organize your evidence, and be ready to answer questions from the panel. A well-prepared and persuasive presentation can significantly affect the outcome of your expungement request.

Key Questions Answered

What is a FINRA Expungement?

A FINRA expungement removes specific information from a financial professional’s record maintained by FINRA. This helps clear marks that could negatively impact one’s career.

How Do I Know if I Am Eligible for a FINRA Expungement?

Eligibility for expungement depends on the nature of the infraction and whether it meets FINRA’s criteria, such as being factually impossible or erroneous. Consulting with a FINRA expungement attorney can help determine eligibility.

What is the Process for Filing a FINRA Expungement?

The process involves submitting a written request, attending an arbitration hearing, and potentially obtaining court confirmation of the arbitration award. Detailed preparation and legal guidance are crucial.

Can I File for a FINRA Expungement on My Own or Do I Need a Lawyer?

While it is possible to file for expungement on your own, working with an experienced attorney significantly increases the chances of success due to the complex nature of the process.

How Long Does a FINRA Expungement Process Typically Take?

The process duration can vary, but it typically takes several months to over a year, depending on the case’s complexity and the arbitration panel’s schedule.

What are the Potential Benefits of a FINRA Expungement?

Expungement can restore your professional reputation, open up career opportunities, and enhance client trust, thereby positively impacting your career in the financial industry.

Can I Still Work in the Financial Industry if I Have a Mark on My Record That I Want Expunged?

Yes, but a mark on your record can limit career opportunities and client trust. Expungement can help mitigate these issues.

What Types of Offenses Can Be Expunged Through FINRA?

Offenses that meet specific criteria, such as being factually impossible, clearly erroneous, or not involving investor protection issues, can be expunged.

Will a FINRA Expungement Completely Remove the Mark from My Record?

Yes, once expungement is granted and confirmed, the mark is removed from the CRD, effectively clearing your FINRA record.

How Much Does a FINRA Expungement Cost?

The cost can vary based on legal fees, arbitration fees, and other associated costs. It is advisable to consult with a FINRA expungement attorney to get a clear understanding of the potential expenses.

Can I Appeal a Decision Made by FINRA Regarding My Expungement?

In some cases, it is possible to vacate the decision. Consulting with a FINRA expungement attorney can help determine the best course of action.

Will My Employer Be Notified of My FINRA Expungement?

Employers may be notified of the expungement process and its outcome. It is essential to communicate with your employer and provide context for the expungement.

What Should I Do if My FINRA Expungement is Denied?

If your expungement is denied, consult with your attorney to explore other options, such as appealing the decision or pursuing alternative dispute resolution methods.

Can I Still Disclose My Expunged Offense in Certain Situations?

Yes, in some situations, you may need to disclose the expunged offense, especially when required by law or regulatory authorities.

BrokerCheck: Your Public Record Matters

BrokerCheck is a tool provided by FINRA that allows investors to check the background of brokerage firms and financial professionals. It’s a critical resource for transparency in the financial industry. Ensuring your record on BrokerCheck is clean is essential for maintaining trust with clients. A mark on your BrokerCheck report can be detrimental, affecting client perceptions and career opportunities. Clearing your record through expungement means ensuring that negative information is removed from BrokerCheck, thereby protecting your professional reputation.

Clearing your FINRA record is a critical step toward restoring your professional reputation and advancing your career in the brokerage industry. By following these strategies and working with an experienced FINRA expungement attorney, you can navigate the complex expungement process to clean your record.