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.

What is a Series 6 License?

If you’re considering a career in the financial services industry, you’ve likely come across the term “Series 6 License.” This license is essential for individuals who want to sell certain types of securities, such as mutual funds, variable annuities, and insurance products. Issued by the Financial Industry Regulatory Authority (FINRA), the Series 6 License is a key credential for professionals aiming to work in financial advisory roles or as representatives of financial institutions.

At Bakhtiari & Harrison, we understand how important it is for financial professionals to navigate the complex regulatory landscape. Let’s take a closer look at what the Series 6 License entails, who needs it, and how it can impact your career.

What Can You Do With a Series 6 License?

A Series 6 License allows individuals to sell certain investment products that are generally considered more straightforward and lower-risk than other types of securities. Specifically, this license permits holders to:

Sell mutual funds
Offer variable annuities
Sell variable life insurance products
Distribute unit investment trusts (UITs)

However, it’s important to note that the Series 6 License does not authorize holders to sell all types of securities. For example, if you want to sell stocks, bonds, or options, you will need additional licenses, such as the Series 7 License. The Series 6 is often referred to as a “limited” license because it focuses on packaged investment products rather than individual stocks or more complex securities.

Who Needs a Series 6 License?

If your career involves selling or advising on mutual funds, annuities, or life insurance products, a Series 6 License is a requirement. This applies to various financial professionals, including:

Financial Advisors
Investment Company Representatives
Insurance Agents who offer variable products

In addition to passing the Series 6 exam, candidates must be sponsored by a FINRA member firm or other self-regulatory organization (SRO). This sponsorship is an essential step before you can even register for the exam. Without it, you won’t be able to sit for the Series 6 test.

Series 6 Exam Overview

The Series 6 exam, officially known as the “Investment Company and Variable Contracts Products Representative Qualification Examination,” is administered by FINRA. The exam consists of 50 multiple-choice questions and covers a broad range of topics, including:

Types of securities and their characteristics
Financial regulations and regulatory agencies
Ethical and suitability considerations
Client communications and interactions

Candidates are given 90 minutes to complete the exam, and a passing score of 70% is required. While this may seem straightforward, proper preparation is essential, as the material can be complex for those unfamiliar with financial products or regulations. FINRA’s exam content outline provides more detailed information on the exam topics.

Once you pass the Series 6 exam, you are required to register with FINRA and a relevant state regulatory authority. Continuing education is also mandatory to maintain your license, as regulations and industry practices are always evolving.

Importance of Compliance for Series 6 License Holders

Holding a Series 6 License comes with certain responsibilities, particularly when it comes to compliance. FINRA and the SEC have strict rules governing how licensed individuals must conduct their business. These rules aim to protect investors and ensure transparency in the sale of securities. Violations can lead to serious consequences, including fines, suspension, or even revocation of your license.

For example, under FINRA Rule 2111, financial professionals must ensure that their recommendations are “suitable” for their clients. This means that before making a recommendation, the representative must consider factors such as the client’s financial situation, investment goals, and risk tolerance. Failure to meet these standards can result in enforcement actions, as seen in various FINRA cases where individuals were penalized for making unsuitable recommendations.

How a Series 6 License Can Boost Your Career

For professionals looking to build a career in financial services, obtaining a Series 6 License is often the first step. This license opens the door to a variety of roles within the financial industry, including opportunities at investment firms, insurance companies, and banks. In addition, the Series 6 License can serve as a stepping stone toward more advanced licenses like the Series 7 or Series 65, which offer a broader range of products and services you can provide.

Having a Series 6 License can also enhance your credibility with clients. It shows that you’ve met the regulatory requirements to offer certain types of investment products and that you are committed to upholding the standards set by FINRA and other regulatory bodies.

Need Help Navigating the Licensing Process?

Obtaining your Series 6 License is a significant step, but it’s just one part of a larger process of building a successful career in financial services. At Bakhtiari & Harrison, we have extensive experience working with financial professionals to ensure they remain compliant with industry regulations. If you have questions about licensing requirements or need assistance with any aspect of your securities business, we’re here to help. Contact us today for guidance on your path to success in the financial industry.