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.

Ryan Bakhtiari – Bakhtiari & Harrison – Trusted Securities Lawyers

Ryan Bakhtiari

Contact Ryan Bakhtiari

Ryan Bakhtiari – Partner, Bakhtiari & Harrison

Ryan Bakhtiari represents clients in securities disputes before FINRA (NASD, NYSE), state and federal courts. In June 2019, Mr. Bakhtiari was nominated to serve as a public member of the Discovery Task Force Committee (DTFC) of the Financial Industry Regulatory Authority (FINRA) which is the advisory group, established in conjunction with a directive from the U.S. Securities & Exchange Commission that reviews substantive issues relating to discovery in arbitration proceedings that are conducted under the auspices of the FINRA Code of Arbitration Procedure.

In June 2013, Mr. Bakhtiari was named Chairman of the National Arbitration and Mediation Committee (“NAMC”) of FINRA. The NAMC is an advisory group that makes recommendations on rules, regulations and procedures governing FINRA arbitration, mediation and dispute resolution.

In June 2011, Ryan Bakhtiari was nominated to serve as a public member of the Nasdaq OMX BX Arbitration Committee, which is the advisory group that provides recommendations on rules, regulations and procedures governing arbitrations, mediations and dispute resolution for the Nasdaq and Boston Stock Exchanges.

In 2009, Ryan Bakhtiari was nominated to serve as a public member of the National Arbitration and Mediation Committee of FINRA.

Mr. Bakhtiari served on the Board of Directors of the Public Investors Arbitration Bar Association (PIABA) from 2008 to 2013 and served as President for the 2011 to 2012 term. PIABA is a nationwide organization of securities lawyers that represent investors in disputes with the financial service industry.

Ryan Bakhtiari served on the faculty of the Practicing Law Institute (2012, 2014, 2015, 2016, 2017, 2019 and 2020), the New York City Bar Association’s presentation of Securities Arbitration and Mediation Hot Topics (2012) and has spoken at the FINRA Annual Conference (2012 and 2014) on the topic of securities arbitration.

Ryan Bakhtiari is a past member of the board of editors, managing editor of the PIABA Bar Journal and edited the “Recent Arbitration Awards” column covering significant NASD and NYSE arbitration awards. Mr. Bakhtiari has spoken at the Public Investors Arbitration Bar Association annual meeting, California mid-year meeting, authored and co-authored several articles. Ryan Bakhtiari was a teaching assistant and extern to the Honorable James N. Barr, United States Bankruptcy Judge for the Central District of California and presently serves as a FINRA securities arbitrator.

In addressing investors right’s issues, Ryan Bakhtiari has been quoted by the press in publications that include the New York Times, Wall Street Journal, Bloomberg, Los Angeles Times, Reuters, Dow Jones Business News, NY Post, Los Angeles Business Journal, The American Banker and Cleveland Plains Dealer.

Ryan Bakhtiari was recognized from 2014 to 2024 as a Southern California Super Lawyer. Between 2005 and 2013 he was recognized as a Southern California Super Lawyer Rising Star. Ryan Bakhtiari litigated the following cases which resulted in published opinions:

Hosier, et al. v. Citigroup Global Markets, Inc., 2011 U.S. Dist. LEXIS 146670 (D. Colo. December 21, 2011): Confirmation of $54.1 million arbitration award, including punitive damages and attorneys fees.
Maria Brezden, et al. v. Associated Securities Corp, et al., 2009 U.S. Dist. LEXIS 49557 (C.D. Cal. 2009): Petition to Vacate $8.9 million arbitration award successfully denied.
Coutee v. Barington Capital Group, LP, 336 F.3d 1128 (9th Cir. 2003): Confirmation of arbitration award of punitive damages and attorneys fees.
Goodman v. CIBC Oppenheimer & Co., 131 F. Supp. 2d 1180 (C.D. Cal. 2001): Federal Arbitration Act does not provide an independent basis for federal subject matter jurisdiction.

Education

B.A. – University of California Los Angeles, 1995
J.D. – Southwestern University School of Law, 1998
Journal of Law and Trade in the Americas, Lead Articles Editor

Bar Admissions

California, 1998
United States District Court Central District California, 1998
District of Columbia, 1999
United States Court of Appeals for the Fifth Circuit, 1999
United States District Court Northern District California, 2000
United States Court of Appeals for the Ninth Circuit, 2000
Texas, 2004
New York, 2005
United States District Court for the District of Colorado, 2011
United States District Court Eastern District of California, 2013
United States District Court Southern District of New York, 2015

Publications

Trends in Preventing Senior Financial Abuse: PLI Current: White Collar Practice Journal, Vol.2, No.1 (September 2019)
Post-Settlement Expungements: An Investor Protection Problem That Continues To Wait For a FINRA Solution: Practicing Law Institute Securities Arbitration Handbook (2017)
The 20-Day Exchange: Identification of Expert Witnesses: The Neutral Corner (Volume 2 – 2016)
The Use of Third Party Subpoenas to Determine a Brokerage Firm’s Pre-Hiring Due Diligence and Post-Hiring Supervision: Public Investors Arbitration Bar Association (2015)
Confidentiality in the FINRA Forum: Practicing Law Institute Securities Arbitration Handbook (2015)
Market Adjusted Damages in the FINRA Forum: PIABA Bar Journal, Volume 21, No. 2 (2014), reprinted in the Consumer Attorneys Associations for Southern California Advocate (April 2016)
The Time for a Uniform Fiduciary Duty Is Now: St. John’s Law Review, Vol. 87: Iss. 2 & 3, 313 (2013)
FINRA Six-Year Eligibility Rule 12206: The Purchase Date is Often Not the Triggering “Occurrence or Event Giving Rise to a Claim.”: Public Investors Arbitration Bar Association (2013)
Discoverability of Wells Submissions: What They Are And How To Get Them: Public Investors Arbitration Bar Association (2012)
Discovery of Regulatory Documents: Debunking the Myth of the “SEC” Privilege in Securities Arbitration: Public Investors Arbitration Bar Association (2011)
Arbitrators Misclassified: Looking Back to Move Forward: Public Investors Arbitration Bar Association (2011)
The Prospectus Defense: Defeating It As A Matter of Fact and Law: Public Investors Arbitration Bar Association (2009)
The Credit Crisis Glossary: Public Investors Arbitration Bar Association (2008)
From Wall Street to Main Street: A Guide To Litigation Over Hedge Funds Sold by Brokerage Firms to Retail Investors: Public Investors Arbitration Bar Association (2005)
Supervising Retail Customer Accounts: Public Investors Arbitration Bar Association (2005)
Practice Pointers For Trying the Variable Annuity Case: Public Investors Arbitration Bar Association (2004)
Governing Law Clauses in Customer Agreements: Public Investors Bar Association (2003)
Arbitration: Can It Be Waived?: Practicing Law Institute Securities Arbitration Handbook (2002)
2001: An Update On Best Execution and Suitability Standards For Online Trading: Public Investors Arbitration Bar Association (2001)
Selective Recission and the Offset Defense in Securities Cases: A Survey of the Law: Public Investors Arbitration Bar Association (2000)
Motion Practice in Securities Arbitration: A Claimant’s Point of View: Public Investors Arbitration Bar Association (1999)
Why Shouldn’t Clearing Firms be Liable: Public Investors Arbitration Bar Association (1998)
Clearing Firm Liability: A Forward Looking Analysis: Practicing Law Institute Securities Arbitration Handbook (1998)
Liability of Control Persons at Second Tier Firms: Public Investors Arbitration Bar Association (1997)
Control Person Liability in the Securities Industry: A Legal Overview and Practical Applications: Practicing Law Institute Securities Arbitration Handbook (1997)