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.

Berthel Fisher & Company Investment Lawyer

Berthel Fisher & Company is an independent broker-dealer and registered investment adviser (RIA) based in Cedar Rapids, Iowa. With decades of experience in the financial services industry, Berthel Fisher serves a network of financial professionals who provide investment and financial planning services to individual and institutional clients. This provides a review of the firm’s history, regulatory profile, and key business metrics, with a particular focus on its compliance and customer relations.

History of Berthel Fisher & Company

Founded in 1985, Berthel Fisher & Company began with a mission to support independent financial advisors by offering a platform for delivering personalized financial solutions. Over the years, the firm has expanded its network and service offerings to include wealth management, retirement planning, and alternative investment products. However, its growth has been accompanied by challenges in maintaining regulatory compliance and addressing customer grievances.

Key Business Metrics

CRD Number

Berthel Fisher & Company is registered under CRD number 13609. This identifier is used by regulatory bodies to track the firm’s compliance and registration history.

Number of Regulatory Events

According to BrokerCheck and the firm’s CRD record, Berthel Fisher & Company has been involved in more than 30 regulatory events. These events largely pertain to supervisory failures, inadequate disclosures, and compliance lapses. Notably, the firm has faced penalties for failing to adequately supervise its representatives and for issues related to the sale of unsuitable investments. These incidents highlight persistent challenges in the firm’s compliance infrastructure.

Number of Employees

Berthel Fisher & Company employs approximately 200 professionals who provide operational, compliance, and administrative support to its network of financial advisors.

Assets Under Management (AUM)

Berthel Fisher oversees approximately $10 billion in assets under management (AUM) as of 2023. This figure reflects the firm’s ability to attract independent financial advisors and their clients, despite its regulatory challenges.

Revenue

The firm generates approximately $120 million in annual revenue through brokerage services, advisory platforms, and alternative investment products.

Regulatory and Compliance Landscape

Berthel Fisher operates under the oversight of the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). While the firm has taken steps to address compliance deficiencies, its regulatory history indicates recurring issues that have required ongoing remediation.

Notable Regulatory Issues

Berthel Fisher has faced a number of significant regulatory actions over the years:

Supervisory Failures: The firm has been penalized multiple times for failing to adequately supervise its representatives. These supervisory lapses have often involved unsuitable investment recommendations and insufficient oversight of alternative investments such as non-traded REITs and variable annuities.
Inadequate Disclosures: Regulatory findings have highlighted instances where the firm failed to provide adequate disclosures to clients, particularly regarding fees and potential conflicts of interest.
Penalties and Fines: Berthel Fisher has paid substantial fines to FINRA and other regulatory bodies, with some cases involving millions of dollars in penalties. These fines underscore the severity of the compliance issues faced by the firm.

While the firm has implemented measures to address these shortcomings, its regulatory history continues to raise concerns about the effectiveness of its compliance framework.

Customer Complaints

Customer complaints against Berthel Fisher often involve allegations of unsuitable investment recommendations, misrepresentation, and lack of transparency regarding fees. These complaints highlight the need for improved oversight and communication within the firm’s advisor network.

Suitability Issues: A significant portion of complaints pertain to the sale of complex investment products, such as non-traded REITs, to clients who may not fully understand the associated risks.
Fee Transparency: Some clients have alleged that fees were not adequately disclosed, leading to disputes and dissatisfaction.

The firm has resolved many of these complaints through arbitration and mediation, but the volume of grievances suggests underlying issues that warrant further attention.

Advisor Support and Client Services

Berthel Fisher provides its advisors with tools and resources to manage their practices, including access to technology platforms, compliance support, and a broad range of investment products. However, the firm’s support infrastructure has been criticized for not adequately addressing the compliance and supervisory needs of its advisors.

Clients benefit from personalized financial advice, but the firm’s regulatory and customer complaint history indicates areas where service quality and transparency could be improved.

Customer Experience and Reputation

While Berthel Fisher has built a network of loyal advisors and clients, its reputation has been marred by regulatory actions and customer complaints. Prospective clients and advisors should carefully review the firm’s regulatory history and ensure that its services align with their expectations and needs.

Looking Ahead

Berthel Fisher faces ongoing challenges in improving its compliance infrastructure and addressing customer concerns. The firm’s ability to rebuild trust and enhance its reputation will depend on the effectiveness of its corrective measures and its commitment to regulatory compliance.

Final Thoughts

Berthel Fisher & Company has a long history in the financial services industry, but its track record includes significant regulatory and customer-related challenges. While the firm provides a platform for financial advisors and offers a range of investment solutions, its compliance deficiencies and customer complaints underscore the need for continued improvement.

For potential advisors and clients, conducting thorough due diligence is essential. Understanding the firm’s regulatory history and evaluating its services against your specific needs will help you make informed decisions about partnering with Berthel Fisher & Company. For more information contact Bakhtiari & Harrison.