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.

How Do I Report Investor Fraud?

Investor fraud can result in significant financial and emotional harm, but taking swift and decisive action can help protect your interests and hold the perpetrators accountable. Reporting investor fraud is a critical step in seeking justice and preventing others from becoming victims. Here’s a step-by-step guide on how to report investor fraud effectively.

Identify the Signs of Investor Fraud

Before reporting, it’s important to confirm whether the activity constitutes investor fraud. Common signs include:

Unrealistic Promises: Guaranteed high returns with little or no risk, which is rarely credible.
Unauthorized Transactions: Trades or account activity you did not approve.
Missing Documentation: Difficulty obtaining records or contracts related to the investment.
Pressure Tactics: Urging you to make quick decisions without time to evaluate the risks.
Misleading Information: False or incomplete statements about the investment.

If you recognize any of these warning signs, it’s time to take action.

Gather Evidence

Having detailed records of the fraudulent activity strengthens your case when reporting investor fraud. Collect and organize:

Investment Documents: Contracts, agreements, or prospectuses.
Transaction Records: Statements or receipts showing where your money went.
Communications: Emails, texts, or voicemails from the individual or organization involved.
Promotional Materials: Brochures, presentations, or advertisements used to solicit your investment.

The more evidence you provide, the stronger your report will be.

Report to the Appropriate Authorities

Investor fraud can be reported to various regulatory agencies and law enforcement entities, depending on the nature of the fraud. Below are key organizations where you can file a report:

The Securities and Exchange Commission (SEC)
The SEC is a federal agency responsible for regulating the securities industry and protecting investors. You can file a complaint through the SEC’s online portal. Be prepared to provide details about the fraudulent activity and any supporting documentation.
Financial Industry Regulatory Authority (FINRA)
If your fraud involves a broker or brokerage firm, you can file a complaint with FINRA. They oversee the conduct of brokers and have an arbitration process for resolving disputes.
State Securities Regulators
Each state has a securities regulator that handles fraud involving state-registered advisors or firms. Contact your state’s office to file a complaint.
Federal Trade Commission (FTC)
The FTC deals with broader investment scams, including Ponzi and pyramid schemes. File a report through their website or call their hotline.
Local Law Enforcement
For criminal fraud cases, file a report with your local police department. This creates an official record and may lead to a criminal investigation.

Notify Financial Institutions

If the fraud involves your bank or brokerage accounts, alert your financial institution immediately. They may freeze transactions, assist with recovering funds, or provide records needed for your case. Many banks and brokerage firms have fraud departments dedicated to handling such situations.

Seek Legal Advice

While reporting fraud to authorities is important, consulting an experienced investment fraud attorney can provide invaluable guidance. Legal professionals can:

Help you understand your rights and options.
Assist in preparing a comprehensive report.
Represent you in arbitration or litigation to recover losses.
Coordinate with regulatory agencies to strengthen your case.

Attorneys like those at Bakhtiari & Harrison in Los Angeles specialize in securities law and can guide you through the reporting and recovery process.

Follow Up on Your Report

After filing your complaint, stay engaged with the authorities handling your case. Keep track of:

Case Numbers and Contacts: Record the case number and the names of officials managing your report.
Updates: Regularly check the status of your case and provide any additional information requested.
Next Steps: Understand what actions the authorities are taking and how they may involve you.

Your participation can be critical to the progress of the investigation.

Take Preventative Steps Moving Forward

Once you’ve reported the fraud, focus on safeguarding yourself against future risks. Some preventative measures include:

Research Investments Thoroughly: Verify the credentials of brokers and financial advisors through FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure.
Be Skeptical of Promises: Avoid any investment opportunity that guarantees unrealistic returns.
Monitor Accounts Regularly: Review account activity frequently to catch unauthorized transactions early.
Educate Yourself: Learn about common scams and tactics used by fraudsters.

Why Choose Bakhtiari & Harrison to Represent You in an Investor Fraud Matter?

Reporting investor fraud can be overwhelming, especially when dealing with complex financial schemes. Bakhtiari & Harrison are experienced securities attorneys who can help you navigate the reporting process, build a strong case, and recover your losses. Their client-first approach ensures you receive the support and guidance you need during this challenging time.

Don’t let investment fraud rob you of your financial future. Contact Bakhtiari & Harrison today for a consultation. Their expert attorneys will assist you in reporting the fraud, protecting your rights, and seeking the justice you deserve.