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.

Beverly Hills Investment Fraud Lawyers

When it comes to safeguarding your investments and ensuring compliance with the complex regulations governing securities, having a trusted legal partner by your side is essential. Bevelry Hills investment fraud lawyers at Bakhtiari & Harrison focus on providing top-tier legal services.

Why Choose Bakhtiari & Harrison as Your Beverly Hills Investment Fraud Lawyers?

Comprehensive Legal Expertise:Our team of experienced attorneys has in-depth knowledge of FINRA regulations and securities law. We handle a wide range of issues, including compliance, arbitration, litigation, and enforcement actions. Our expertise extends to representing clients in disputes involving broker-dealers, registered investment advisors (RIAs), and investors.
Personalized Legal Strategies:At Bakhtiari & Harrison, we understand that each client’s situation is unique. We provide tailored legal strategies to meet your specific needs and objectives. Whether you are dealing with a compliance review or facing a complex arbitration case, our attorneys will craft a personalized approach to achieve the best possible outcome.
Proven Track Record:Our Beverly Hills FINRA Securities Attorneys have a proven track record of successfully representing clients in various securities-related matters. We have secured favorable outcomes in numerous FINRA arbitration cases, ensuring that our clients’ rights and investments are protected.
Client-Centered Approach:We prioritize our clients’ interests and work diligently to provide exceptional service. Our attorneys are committed to maintaining open lines of communication, keeping you informed at every step of the legal process. Your peace of mind and satisfaction are our top priorities.

Our Services

FINRA Arbitration and Litigation:Our attorneys are skilled in representing clients in FINRA arbitration and litigation. We handle cases involving broker misconduct, unsuitable investment recommendations, unauthorized trading, and more. Our goal is to resolve disputes efficiently and favorably for our clients.

Regulatory Compliance:We assist broker-dealers and RIAs in navigating the complex regulatory landscape. Our services include compliance audits, internal investigations, and representation in enforcement actions. We help ensure that your firm adheres to all applicable regulations and avoids costly penalties.

Investor Representation:For investors who have suffered financial losses due to broker misconduct or fraudulent practices, our attorneys provide aggressive representation. We work tirelessly to recover your losses and hold wrongdoers accountable.

Employment Matters:Our firm also specializes in employment matters within the securities industry. We handle cases involving employment agreements, compensation disputes, wrongful termination, and more. Our attorneys protect the rights of financial professionals and ensure fair treatment.

Understanding California Securities Code Violations in Trading Securities

In the complex world of securities trading, adherence to legal and ethical standards is paramount. California has established a robust legal framework to ensure the integrity of its financial markets and protect investors from malpractices. The following will delve into some common violations under the California Securities Code, including suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business advantage.

Suitability in California Securities Law

One of the fundamental principles under the California Securities Code is the requirement for investment advisers and brokers to ensure that their investment recommendations are suitable for their clients. According to California Corporations Code § 25216, advisers must consider the client’s financial situation, investment objectives, and risk tolerance when making recommendations. This “suitability” standard mandates a thorough understanding of the client’s needs and the characteristics of the investments being recommended. Trust Beverly Hills investment fraud lawyers at Bakhtiari & Harrison to be your partner in securities law.

A violation occurs when a broker or adviser recommends unsuitable investments, failing to consider the client’s unique circumstances. Such actions can lead to significant financial losses for the client and potential legal liability for the adviser. The California suitability requirement is integral to protecting investors from inappropriate and potentially harmful investment strategies.

Unauthorized Trading in California

Unauthorized trading is explicitly prohibited under California Corporations Code § 25235. This section mandates that brokers obtain explicit consent from clients before executing trades on their behalf. Unauthorized trading involves executing transactions without the client’s knowledge or approval, breaching the fiduciary duty that brokers owe to their clients.

This violation can result in severe financial consequences for the client and disciplinary action against the broker, including fines, suspension, or revocation of their license. Ensuring that clients are fully aware of and approve all transactions is critical to maintaining trust and compliance with California securities regulations.

Misrepresentations Under California Securities Law

California Corporations Code § 25401 addresses misrepresentations and omissions of material facts in the sale of securities. Brokers and advisers are prohibited from making false statements or omitting crucial information that could affect an investor’s decision-making process. Trust Beverly Hills investment fraud lawyers at Bakhtiari & Harrison to be your partner in securities law. Misrepresentations can include false claims about the financial health of a company, the risks associated with an investment, or the expected returns.

Investors rely on accurate and complete information to make informed decisions. Any deviation from this standard undermines market integrity and can lead to significant investor harm. Violations of California § 25401 can result in civil liabilities, including rescission of transactions and monetary damages. Beverly Hills investment fraud lawyers at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses. Failure to disclose material information is closely related to misrepresentations and is governed by the same section, California Corporations Code § 25401. This provision requires full and fair disclosure of all relevant information that an investor would need to make an informed decision. Failure to disclose such information is considered fraudulent and deceptive.

Material information can include details about the financial performance of an investment, potential conflicts of interest, or any other fact that could influence an investor’s decision. Transparency is essential in the securities industry, and failure to uphold this standard can lead to legal action and penalties.

Unfair Business Advantage in California

Unfair business practices in the securities industry are addressed under California’s Unfair Competition Law (UCL), Business and Professions Code § 17200. Beverly Hills investment fraud lawyers at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses. This broad provision prohibits any unlawful, unfair, or fraudulent business acts or practices, including those in the securities sector.

Unfair business advantage can manifest in various forms, such as insider trading, market manipulation, or exploiting non-public information for personal gain. These practices undermine market fairness and investor confidence. Violations of California § 17200 can result in injunctions, restitution, and civil penalties, providing robust protection for investors and maintaining market integrity.

Common Code Violations in Trading Securities

Several other common violations under the California Securities Code relate to trading securities, including:

Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, violating fiduciary duties as outlined in California Corporations Code § 25218.
Front-Running: Brokers executing orders on a security for their own account while taking advantage of advance knowledge of pending orders from their customers, which can violate California Corporations Code § 25216(a).
Ponzi Schemes: Investment frauds that pay returns to earlier investors from the new capital contributed by newer investors, rather than from profit earned, falling under fraudulent schemes addressed by California Corporations Code § 25401.
Insider Trading: Trading a public company’s stock or other securities based on material, non-public information about the company, violating fair market practices as described in California Corporations Code § 25502. Beverly Hills investment fraud lawyers at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses.
Failure to Supervise: Supervisors failing to adequately oversee the actions of brokers, leading to various forms of misconduct, which is addressed under California Corporations Code § 25216(c).

If you are in need of a Beverly Hills, California FINRA Securities Attorney, look no further than Bakhtiari & Harrison. Our dedicated Beverly Hills Investment Fraud Lawyer team is here to provide the legal support and expertise you need to protect your investments and navigate the securities industry with confidence.

Contact us to schedule a consultation with one of our experienced Beverly Hills investment fraud lawyers. Trust Beverly Hills investment fraud lawyers at Bakhtiari & Harrison to be your partner in securities law.

We represent victims of financial and investment fraud throughout California, including Beverly Hills, Hidden Hills, Los Angeles, Orange County, Pacific Palisades, Palm Springs, Pasadena, San Diego, San Francisco, and other locations. Beverly Hills investment fraud lawyers at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses.