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.

Can I Sue My Stockbroker in FINRA Arbitration in California?

Q: 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.

Can I sue my stockbroker? Investing your hard-earned money is a big decision. You trust your stockbroker to make wise choices with your investments. But what happens when things go wrong? If you’re in California and believe your stockbroker has mismanaged your investments, you might be able to take legal action through FINRA arbitration. This process can help you recover your losses and hold your broker accountable. Here’s a detailed guide on how to navigate FINRA arbitration.

Understanding FINRA Arbitration and Whether I Can Sue My Stockbroker

What is FINRA? The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization that regulates member brokerage firms and exchange markets. It plays a crucial role in protecting investors by ensuring that the securities industry operates fairly and honestly. What is FINRA Arbitration? FINRA arbitration is a dispute resolution process designed explicitly for the securities industry. Instead of going to court, investors and brokers present their case to a neutral third party called an arbitrator. The arbitrator listens to both sides, reviews the evidence, and makes a binding decision. This process is often faster and less formal than traditional litigation.

Why Choose FINRA Arbitration? How to Sue My Stockbroker

Efficiency: FINRA arbitration is generally faster than court litigation. Cases are often resolved within a year, whereas court cases can drag on for several years.
Cost: Arbitration can be less expensive than a court trial. The fees are typically lower, and the process is streamlined to reduce legal costs.
Expertise: Arbitrators in FINRA cases usually have experience in the financial industry. This expertise can be beneficial in understanding complex financial issues and making informed decisions.

Sue My Stockbroker? Common Reasons to Sue

Investors can sue their stockbrokers for various reasons. Here are some common grounds:

Misrepresentation or Fraud: Can I sue my stockbroker for fraud? If your broker provided false information or misled you about an investment, you could sue for misrepresentation or fraud. This includes situations where the broker intentionally hides the risks of an investment or exaggerates its potential returns.
Breach of Fiduciary Duty: Can I sue my stockbroker for breaching a fiduciary duty? Brokers have a fiduciary duty to act in their clients’ best interests. If your broker put their interests ahead of yours, you might have a case for breach of fiduciary duty. This could involve making trades that benefit the broker financially but harm your investment portfolio.
Unsuitable Recommendations: Can I sue my stockbroker for unsuitable trades? Brokers must recommend investments that are suitable for their clients based on their financial situation, investment goals, and risk tolerance. If your broker recommended investments that were inappropriate for you, you could sue for unsuitability.
Negligence: Can I sue my stockbroker for negligence? If your broker was careless or failed to conduct proper due diligence on an investment, you might have a case for negligence. This includes situations where the broker does not adequately research an investment or fails to monitor your portfolio.
Unauthorized Trading: Brokers must have your permission before making trades in your account. If your broker made trades without your consent, you could sue for unauthorized trading.

The FINRA Arbitration Process

Steps to File a Claim The FINRA arbitration process involves several steps. Here’s a detailed look at each one: File a Statement of Claim The first step to sue my stockbroker is the Statement of Claim which outlines your case against the broker, including the facts of the dispute, the damages you are seeking, and the legal grounds for your claim. This document is filed with FINRA, which then serves it to the broker or brokerage firm. Answer After receiving the Statement of Claim, the broker or brokerage firm has 45 days to file an Answer. This document responds to the allegations in the Statement of Claim and may include defenses or counterclaims. Select Arbitrators Both parties select arbitrators from a list provided by FINRA. Arbitrators are neutral third parties who will hear the case and make a decision. Each party can strike certain arbitrators from the list and rank the remaining ones based on their preferences. Prehearing Conferences These conferences help organize the case and set timelines for the arbitration process. During these meetings, the arbitrators and parties discuss procedural matters, such as discovery schedules and hearing dates. Discovery During the discovery phase, both parties exchange documents and information relevant to the case. This can include account statements, correspondence, and other evidence. Discovery helps both sides prepare for the hearing by gathering all the necessary information. Hearings The arbitration hearings are similar to a court trial but less formal. Both parties present their case to the arbitrators, including opening statements, witness testimonies, and closing arguments. The arbitrators may ask questions and review the evidence presented. Award After the hearings, the arbitrators deliberate and issue a decision, known as an award. The award is final and binding, meaning both parties must comply with the decision. The arbitrators may order the broker to pay damages, rescind a transaction, or take other actions to resolve the dispute. Statute of Limitations / Rules of Eligibility The statute of limitations is the time limit for filing a claim. In FINRA arbitration, the time limit is generally six years from the event that caused the dispute. This means you must file your claim within six years of the date the alleged misconduct occurred. It’s important to act quickly and consult with a lawyer to ensure you meet all deadlines. Several factors can affect the statute of limitations:

Discovery Rule: In some cases, the clock starts ticking when you discover the misconduct, not when it occurred. For example, if your broker made unauthorized trades without your knowledge, the statute of limitations might start when you first learn about the trades.
Tolling Agreements: Sometimes, parties agree to pause the statute of limitations for a certain period. This can happen if both sides are negotiating a settlement or need more time to gather evidence.
State Laws: State laws can also affect the statute of limitations. It’s essential to understand the specific rules in your state and how they apply to your case.

Preparing for FINRA Arbitration Gathering Evidence Gathering evidence is a crucial step in preparing for FINRA arbitration. Strong evidence can significantly increase your chances of success. Here are some types of evidence you should collect:

Documentation: Bakhtiari & Harrison can help answer your question as to whether you can “Sue My Stockbroker?” Collect all relevant documents, including account statements, trade confirmations, emails, and letters from your broker. These documents can help establish a timeline of events and support your claims.
Witnesses: Identify any witnesses who can support your case. This could include friends or family members who were present during conversations with your broker or other professionals who reviewed your investment portfolio.
Expert Testimony: Sometimes, experts can help explain complex financial issues to the arbitrators. For example, a forensic accountant can analyze your investment records and testify about the broker’s misconduct.

Legal Assistance Hiring a lawyer who concentrates on securities law can be very helpful. They can guide you through the arbitration process, help gather evidence, and represent you during the hearings. A lawyer can also advise you on the strength of your case and the potential outcomes. About FINRA Dispute Resolution Services Overview FINRA Dispute Resolution Services is the largest forum for resolving securities disputes in the United States. It handles most securities arbitrations and mediations in the country. FINRA facilitates the efficient resolution of monetary, business, and employment disputes among investors, securities firms, and employees of securities firms. Role of Arbitrators Arbitrators are neutral third parties who review the evidence and make decisions in disputes. They are not FINRA employees but are selected from a diverse roster of professionals with experience in the securities industry. Arbitrators must follow FINRA’s rules and guidelines to ensure a fair process. Arbitrators receive training on the arbitration process, ethical considerations, and their duties. They must disclose any potential conflicts of interest and maintain impartiality throughout the proceedings. This helps ensure that the arbitration process is fair and unbiased. Prehearing Conferences Before the main hearing, there are prehearing conferences to set timelines and discuss preliminary matters. These conferences are essential for organizing the case and ensuring both parties are prepared. Bakhtiari & Harrison can help answer your question as to whether you can “Sue My Stockbroker?” During these meetings, the arbitrators and parties discuss procedural matters, such as discovery schedules, motion deadlines, and hearing dates. Discovery Process The discovery process involves exchanging documents and information between parties. This step is crucial for gathering evidence and building your case. FINRA provides guidelines to help streamline this process and ensure fairness. Both parties must cooperate and disclose relevant documents, including account statements, trade confirmations, and correspondence. Confidentiality and Security All documents and information in FINRA arbitration are confidential. Arbitrators and parties must handle this information with care, following strict guidelines to protect privacy and confidentiality. This includes safeguarding personal information, financial records, and any sensitive data exchanged during the arbitration process. Ethical Considerations Arbitrators must adhere to a code of ethics to ensure fairness and impartiality. This includes avoiding conflicts of interest, maintaining confidentiality, and acting with integrity. Arbitrators must disclose any potential conflicts and refrain from accepting cases where they cannot be impartial. Bakhtiari & Harrison can help answer your question as to whether you can “Sue My Stockbroker?” Training and Qualifications FINRA provides extensive training for arbitrators to ensure they are well-equipped to handle disputes. This includes basic and advanced training programs covering various aspects of the arbitration process, such as evidence evaluation, ethical considerations, and procedural rules. Arbitrators must complete these training programs before serving on a case. Case Management Arbitrators are responsible for managing the case and ensuring a fair and efficient process. This includes conducting prehearing conferences, ruling on motions, and making procedural decisions. Arbitrators must also ensure that the parties adhere to the timelines and guidelines set during the prehearing conferences.

Can I Sue My Stockbroker? Contact Bakhtiari & Harrison

If you believe your stockbroker mismanaged your investments in California, you have the option to sue through FINRA arbitration. This process provides a fair, efficient, and cost-effective way to resolve disputes without going to court. Understanding the steps involved, gathering the right evidence, and seeking legal advice can help you navigate this process and protect your financial interests. Always act quickly to ensure you meet the necessary deadlines and protect your rights. Following the guidelines outlined in this article can increase your chances of success and hold your stockbroker accountable for any misconduct. Hiring experienced counsel is crucial in navigating the complex world of FINRA arbitration. Bakhtiari & Harrison represent investors who have suffered losses from broker misconduct. Their experience can significantly enhance your case, ensuring that all procedural requirements are met and that you present the strongest possible evidence. Bakhtiari & Harrison can help answer your question as to whether you can “Sue My Stockbroker?” With their help, you can better understand your legal options and increase your chances of a favorable outcome in the arbitration process.