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.

California Investment Fraud Securities Lawyers: A Comprehensive Guide

In California, investment fraud is a significant problem for investors, and understanding the securities laws at times may be confusing. Bakhtiari & Harrison represents victims of investment fraud and other misconduct within the securities industry.

This guide will help you learn how to spot and handle investment fraud, understand California securities laws, and choose the right lawyer.

What a California Investment Fraud Lawyer Does

There are multitude of different types of fraud and scams. Sometimes a trusted advisor can make misrepresentations to trick you into making financial decisions based on false information. Other types of fraud can be criminal in nature, these scams include Ponzi schemes or pyramid schemes, stock market manipulation or insider trading.

Some real-life examples are:

Bernie Madoff’s Ponzi Scheme: Bernie Madoff operated one of the largest Ponzi schemes in history, defrauding thousands of investors out of billions of dollars.

Enron Scandal: Executives at Enron manipulated financial statements to hide the company’s debt, leading to massive losses for investors.

WorldCom Fraud: WorldCom executives falsified accounting entries to inflate the company’s assets by billions of dollars, resulting in one of the largest bankruptcies in U.S. history.

What to Look Out for When Making an Investment

Sometimes invetors will ask what to look out for, what are the red flags? Certain promises including high returns with low risk, illiquid or unregistered investments, strategies that are hard to explain or understand and pressure to act quickly can be warning signs.

Identifying California Investment Fraud and What to Do

If you suspect investment fraud, consider asking questions, verify information when possible, seek assistance from state or governmental authorities, and finally consult a lawyer.

California Investment Fraud – What Laws and Regulations Apply?

The California Corporations Code governs the registration, offer, and sale of securities in the state. It aims to protect investors from fraudulent activities and ensure fair practices in the securities market.

California securities laws include state and federal regulations to protect investors comprehensively. These laws require the registration of securities and strict disclosure requirements.

How California Investment Fraud Securities Lawyers Can Help

The roles and responsiblity of a securities lawyer is to provide aggressive legal represenation, investigate where possible the customers case and represent the customer in either FINRA arbitration or state or federal court. Securities lawyers also work to negotiate settlements where customers have suffered financial losses.

Understanding the FINRA Arbitration Process

The Financial Industry Regulatory Authority (FINRA) arbitration process is an alternative to going to court. It is often faster and less expensive. Here’s a detailed look at the process:

Filing a Claim: You start by filing a statement of claim. This document explains the dispute and what you seek in damages.
Responding: The opposing party (usually a broker or brokerage firm) files an answer to the claim. They will address the allegations and may present defenses.
Selecting Arbitrators: Both parties choose arbitrators from FINRA’s list. Arbitrators are neutral parties who will hear the case and make a decision.
Pre-Hearing Conferences: Arbitrators and parties meet to schedule hearings and discuss the case. This helps organize the process and set timelines.
Discovery: Both sides exchange documents and information related to the case. This phase is crucial for gathering evidence.
Hearings: During the hearings, both parties present their case, evidence, and witnesses to the arbitrators. This is similar to a court trial but less formal.
Award: After the hearings, the arbitrators make a decision called an award. This decision is binding, meaning both parties must follow it.

Typically the benefits of FINRA Arbitration outweigh a state or federal court case. FINRA arbitration tends to be cost-effective, time efficient, confidential and the arbitrators tend to be comparatively better suited to hear evidence concerning financial transactions.

Importance of Hiring Experienced Counsel

Experience matters; lawyers practicing in this field have a deep understanding of securities laws and know how to navigate complex legal issues. Let’s face it: the securities industry is going to defend your case with seasoned and experienced counsel. A good lawyer can develop a comprehensive strategy tailored to your case, increasing the likelihood of a favorable outcome. Experienced counsel also has a much better chance of delivering a favorable outcome due to their expertise and strategic approach. They have access to a network of experts, including forensic accountants and private investigators, to build a strong case.

Knowing you have a capable lawyer handling your case can reduce stress and allow you to focus on other important aspects of your life. Experienced securities attorneys know how to present your case compellingly and persuasively, whether in negotiations or arbitration.

Investment fraud can have devastating financial consequences. Understanding California securities laws and seeking legal representation can help protect your interests. By following this guide, you can navigate the complexities of investment fraud, identify potential scams, and choose the right lawyer to represent your case. Stay informed, verify information, and consult experts to safeguard your investments.

Why Bakhtiari & Harrison?

Contact Bakhtiari & Harrison if you believe you are a victim of securities investment fraud. Bakhtiari & Harrison is an “AV” rated law firm, focused on the worldwide representation of clients in complex arbitration, litigation, and related legal services in matters involving the securities industry. The firm’s partners have extensive experience in securities, employment and regulatory matters. Our focus is on delivering strategic and creative client-centric solutions.