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.

SEC Defense Lawyer: Protecting Your Rights in Securities Investigations

Facing an investigation or enforcement action from the Securities and Exchange Commission (SEC) can be a daunting experience. Whether you’re an individual, corporate executive, or financial institution, navigating SEC inquiries requires a clear understanding of the law and a strong defense strategy. This is where an SEC defense lawyer can make a significant difference.

In this blog, we’ll discuss what an SEC defense lawyer does, the types of cases they handle, and how Bakhtiari & Harrison can help protect your rights and reputation during an SEC investigation.

What Does an SEC Defense Lawyer Do?

An SEC defense lawyer represents clients under investigation by the Securities and Exchange Commission. These investigations may involve alleged violations of federal securities laws, including insider trading, fraud, or other forms of misconduct. The lawyer’s primary role is to protect your interests throughout the investigation and, if necessary, in court or administrative proceedings.

Key responsibilities of an SEC defense lawyer include:

Responding to subpoenas and document requests.
Communicating with SEC investigators on your behalf.
Advising you on your rights and legal obligations.
Developing a defense strategy to minimize penalties or resolve the case.
Representing you during depositions, hearings, or trials.

Common SEC Investigations Requiring Defense

The SEC investigates a wide range of activities. Here are some common scenarios where legal defense is crucial:

1. Insider Trading

Accusations of trading securities based on non-public, material information can lead to severe penalties, including fines and imprisonment. An SEC defense lawyer can help clarify the facts and challenge the evidence.

2. Financial Fraud

Cases involving misrepresentation of financial statements, Ponzi schemes, or market manipulation often lead to SEC scrutiny. A defense lawyer works to demonstrate your compliance with applicable regulations or mitigate potential penalties.

3. Misleading Disclosures

Failing to provide accurate or complete information to investors can result in SEC action. A defense attorney ensures that your statements are interpreted within the appropriate legal context.

4. Regulatory Non-Compliance

Failing to comply with SEC registration, reporting, or filing requirements can trigger investigations. Your defense lawyer helps address these issues and negotiate potential resolutions.

5. Whistleblower Complaints

The SEC Whistleblower Program encourages individuals to report securities law violations. If you’re the subject of a whistleblower complaint, an SEC defense lawyer can help protect your rights and challenge unfounded allegations.

The Importance of Early Legal Representation

When the SEC initiates an investigation, acting quickly is critical. A proactive defense can significantly impact the outcome of your case. Here’s why early legal representation matters:

Managing Communications: SEC investigations often involve extensive document requests and interviews. Your lawyer ensures all responses are accurate, minimizing the risk of self-incrimination.
Assessing Evidence: An attorney reviews the evidence against you to identify weaknesses in the SEC’s case or potential defenses.
Negotiating Settlements: In many cases, investigations can be resolved without formal charges. A skilled SEC defense lawyer can negotiate settlements that limit financial and reputational damage.
Preparing for Litigation: If the SEC pursues enforcement actions, your lawyer will build a strong case to challenge their claims and protect your interests.

How Bakhtiari & Harrison Can Help

When you’re facing an SEC investigation, you need a team that understands securities law and has a track record of success. Bakhtiari & Harrison provides comprehensive defense services tailored to your unique situation.

Here’s how we support our clients:

Personalized Defense Strategies: Every case is different. We work closely with you to develop a defense tailored to your circumstances.
Skilled Negotiation: Our team negotiates with SEC officials to resolve investigations efficiently and favorably.
Litigation Support: If your case proceeds to court, we provide aggressive representation to safeguard your rights and reputation.
Guidance and Advocacy: From responding to subpoenas to attending hearings, we ensure you’re informed and supported every step of the way.

SEC investigations can escalate quickly. Delaying action could lead to missed deadlines, greater scrutiny, or weakened defenses. By consulting an SEC defense lawyer early, you gain a better chance of resolving the matter before it causes irreparable harm.

If you’re facing an SEC investigation or enforcement action, don’t leave your future to chance. Contact Bakhtiari & Harrison today to schedule a consultation. Our team is committed to protecting your rights, preserving your reputation, and guiding you through the legal process with confidence.

Your defense starts here—reach out to Bakhtiari & Harrison and take control of your case.