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.

Clearing Your U5: Regain Control of Your Financial Career

Take action today to restore your professional reputation with Bakhtiari & Harrison

Being a FINRA registered representative comes with many responsibilities and expectations. When a brokerage firm terminates you with inaccurate or exaggerated language on your U5 form, it can feel like your career has hit a dead end. Such language can tarnish your reputation and make securing a position with another firm extremely difficult. At Bakhtiari & Harrison, we concentrate on FINRA expungement to remove defamatory language from your U5, allowing you to continue pursuing your chosen profession.

Understanding the Impact of a Negative U5

The Form U5, or Uniform Termination Notice for Securities Industry Registration, is a critical document in the financial industry. It records the reasons for a registered representative’s termination and is accessible to future employers and regulators. If your U5 contains over-the-top or inaccurate statements, it can severely hinder your employment prospects.

Inaccurate U5 disclosures can:

Damage your professional reputation.
Lead to increased scrutiny from regulators.
Deter potential employers from hiring you.
Affect your clients’ trust and confidence.

It’s essential to address any defamatory language promptly to minimize its impact on your career.

The Path to Expungement: Regaining Your Professional Standing

FINRA provides a mechanism to correct or remove false information from your U5 through expungement. Expungement can help you clear your record and present an accurate picture of your professional history to future employers.

What Is FINRA Expungement?

FINRA expungement is the process of removing incorrect or defamatory information from your Central Registration Depository (CRD) record. This process involves arbitration and requires presenting evidence proving the information is false or misleading.

The FINRA Arbitration Process

The arbitration process is a formal proceeding where an impartial arbitrator reviews the evidence and decides on the expungement request.

Steps in the FINRA Arbitration Process:

Filing a Statement of Claim: Initiate the process by filing a claim that outlines the inaccuracies on your U5 and the reasons for expungement.
Selection of Arbitrators: An arbitrator or panel of arbitrators is selected to hear your case.
Discovery Phase: Both parties exchange relevant documents and information.
Hearing: Present your case to the arbitrator, including evidence and witness testimony.
Arbitrator’s Decision: The arbitrator issues an award determining whether the expungement is granted.
Court Confirmation: Obtain a court order confirming the arbitration award to complete the expungement.

Why Professional Representation Matters

Navigating the FINRA expungement process can be complex. Having experienced legal representation increases the likelihood of a successful outcome. At Bakhtiari & Harrison, we have the knowledge to guide you through each step, ensuring that your case is presented effectively.

Ryan Bakhtiari, a highly esteemed attorney, has an exceptional background that includes serving as President of PIABA (Public Investors Arbitration Bar Association) and chairing the FINRA NAMC (National Adjudicatory Council) Committee. His extensive experience in securities law and deep understanding of FINRA’s regulatory framework make him uniquely qualified to handle complex investigations and ensure your rights are effectively protected.

David Harrison brings a wealth of litigation experience to the table. His career includes time at the District Attorney’s Office, where he developed his litigation skills, and as in-house counsel at Morgan Stanley Dean Witter, where he represented the firm and its stockbrokers. David also held a Series Seven license from his time at Shearson Lehman Brothers, further enhancing his understanding of the financial industry and its regulatory demands.

Frequently Asked Questions About FINRA Expungement and Defamation

What is defamation in the context of a U5 form?

Defamation occurs when false statements are made on your U5 form that harm your professional reputation. These statements can be exaggerated claims or completely inaccurate information provided by your former employer.

Can I dispute the language on my U5 form?

Yes, you have the right to dispute any false or defamatory language on your U5. The FINRA expungement process allows you to seek the removal of such information from your record.

How long does the expungement process take?

The expungement process can take several months to a year, depending on the complexity of the case and the arbitration schedule.

Is the arbitration process confidential?

Yes, FINRA arbitration proceedings are generally confidential. Details of the arbitration are not disclosed to the public, protecting your privacy.

Do I need an attorney for the expungement process?

While not required, having an attorney with experience in FINRA matters greatly improves your chances of success. An attorney can navigate the procedural rules and present a compelling case on your behalf.

What evidence is needed to prove defamation on my U5?

Evidence can include employment records, witness statements, performance evaluations, and any documents that contradict the false statements on your U5.

Can expungement help me get rehired in the industry?

While expungement does not guarantee employment, removing defamatory information from your record enhances your professional standing and improves your chances with potential employers.

Will my former employer be involved in the arbitration?

Yes, your former employer will be notified of the arbitration and has the right to participate. They may provide their own evidence and arguments against expungement.

How much does the expungement process cost?

Costs vary based on the specifics of your case, including filing fees, attorney fees, and arbitration costs. We offer consultations to discuss potential expenses and payment options.

How do I start the expungement process?

Begin by contacting a legal professional who is experienced in FINRA expungement. At Bakhtiari & Harrison, we offer consultations to evaluate your case and guide you on the next steps.

Taking the Next Step Towards Career Restoration

A negative U5 doesn’t have to be the end of your financial career. By promptly addressing and removing defamatory language, you can restore your professional reputation and open doors to new opportunities.

At Bakhtiari & Harrison, we are committed to successfully helping financial professionals like you navigate the expungement process. Our team has the knowledge and experience to advocate on your behalf, ensuring that your case is handled with the utmost professionalism.

Don’t let a flawed U5 define your future. Contact Bakhtiari & Harrison today to begin the journey towards clearing your record and reclaiming your career.