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 Hire an Arbitration Lawyer?

When faced with a legal dispute, many individuals and businesses turn to arbitration as a faster, more cost-effective alternative to litigation. Arbitration is commonly used in sectors such as finance, employment, construction, and commercial transactions. While arbitration is less formal than courtroom trials, it remains a legally complex process that can significantly impact the outcome of a dispute. Hiring an arbitration lawyer can make all the difference in ensuring your rights are protected and that you achieve the best possible result.

This blog will explore why hiring an arbitration lawyer is crucial, the benefits they provide, and how they can support you in navigating the arbitration process.

Why Hire an Arbitration Lawyer?

Arbitration is an alternative dispute resolution (ADR) process where parties agree to resolve their conflicts outside of court, often in a private setting. A neutral arbitrator, or a panel of arbitrators, hears both sides of the dispute, reviews evidence, and renders a binding decision, known as an arbitration award. Arbitration is often seen as faster and less expensive than traditional litigation, making it an attractive option for resolving disputes.

Many contracts include mandatory arbitration clauses, meaning that disputes must be handled through arbitration rather than through the courts. These clauses are particularly common in industries such as securities, employment, and commercial transactions. While arbitration is designed to be more efficient, it still requires a deep understanding of legal procedures, strategies, and technical rules—making the guidance of an arbitration lawyer essential.

Understanding Arbitration

Expertise in Arbitration Procedures

Arbitration has its own unique set of procedures, which differ from those in court. Arbitration lawyers are experienced in these processes and understand the specific rules set by organizations like the Financial Industry Regulatory Authority (FINRA) or the American Arbitration Association (AAA). This specialized knowledge ensures that your case is handled correctly, and that all filings, claims, and legal documents comply with the necessary rules and regulations.

For instance, arbitration hearings are usually less formal than court trials, but they still involve presenting evidence, questioning witnesses, and making legal arguments. A lawyer with experience in arbitration knows how to craft a compelling case within this framework, ensuring you have the best possible chance of success.

Effective Case Preparation

Building a strong case is essential in arbitration, just as it is in litigation. An arbitration lawyer is skilled in gathering evidence, preparing witnesses, analyzing contracts, and identifying key legal issues that can strengthen your position. This preparation is critical because arbitration decisions are typically binding, meaning you cannot appeal the decision easily.

Without an experienced lawyer, you may not present your strongest arguments, or you might overlook important details that could have made a difference in the outcome. Arbitration lawyers ensure that your case is thoroughly researched, well-organized, and backed by the appropriate documentation.

Presenting and Defending Your Case

Once the arbitration hearing begins, the role of an arbitration lawyer becomes even more critical. The lawyer will present your evidence, question witnesses, and argue your case before the arbitrator or panel. In this respect, arbitration is similar to a courtroom trial, requiring skilled advocacy to effectively communicate your position.

An arbitration lawyer understands the nuances of legal argumentation and can present your case in a way that resonates with arbitrators. They are also adept at cross-examining the opposing party’s witnesses and challenging their evidence, helping to weaken the other side’s claims.

Navigating the Complexity of Contracts and Legal Claims

Many arbitration cases arise out of contract disputes. Whether you’re involved in a commercial disagreement, employment dispute, or securities arbitration, contracts often play a central role in the conflict. Arbitration lawyers are experts at interpreting complex contractual language and identifying any breaches or obligations that may strengthen your case.

Additionally, arbitration lawyers can advise you on the claims and defenses you should assert. For example, if you are a business owner dealing with a supplier dispute, your lawyer can help identify the legal grounds on which you can base your case—such as breach of contract, misrepresentation, or failure to perform.

Negotiating Settlements

In many cases, arbitration leads to settlement discussions between the parties. Settlements can help resolve the dispute more quickly and with less financial strain. An arbitration lawyer can help you negotiate a favorable settlement that meets your needs, whether during pre-arbitration negotiations or after the arbitration process has started.

Without a lawyer, you may find it challenging to negotiate a fair deal, especially if the other party is represented by legal counsel. An experienced arbitration lawyer ensures that your interests are protected throughout settlement discussions, helping you avoid unfavorable terms.

Enforcement and Appeal of Arbitration Awards

Once an arbitration award is issued, it is typically binding on both parties. In some situations, however, the winning party may need to take legal action to enforce the award, especially if the losing party refuses to comply. Conversely, there may be rare circumstances where challenging an arbitration award is possible, such as cases involving fraud or a violation of the arbitration rules.

An arbitration lawyer can assist with enforcing or challenging an award, ensuring that the final outcome is respected and carried out. They know the procedures for seeking court enforcement of an arbitration decision and can guide you through the process if the other party refuses to comply with the arbitrator’s ruling.

The Benefits of Hiring an Arbitration Lawyer

Hiring an arbitration lawyer provides several advantages that improve your chances of a successful outcome. These benefits include:

Legal Expertise: Arbitration lawyers are skilled at handling the intricacies of arbitration procedures, ensuring that your case is well-prepared and presented effectively.
Time and Cost Efficiency: An experienced lawyer can streamline the arbitration process, saving you time and helping you avoid unnecessary costs.
Improved Negotiation Outcomes: Lawyers bring strong negotiation skills to the table, helping you secure favorable settlements before or during arbitration.
Stronger Case Management: With the help of a lawyer, you can present a stronger case and be more confident that your legal rights are being fully protected.

Should You Hire an Arbitration Lawyer?

If you are involved in an arbitration dispute, hiring an arbitration lawyer can be crucial to achieving a favorable outcome. The arbitration process, while faster and less formal than litigation, is still a legal proceeding that requires specialized knowledge, careful preparation, and skilled advocacy. Whether you are dealing with a securities dispute, employment arbitration, or a business conflict, having an arbitration lawyer by your side can make a significant difference in the final resolution of your case.

If you are facing arbitration and need legal support, contact Bakhtiari & Harrison to discuss your case. Our team can help you understand your rights, build a strong case, and guide you through the arbitration process with confidence.