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.

Easterly ROCMuni Fund Collapse (RMHVX): Investor Information and Options

If you invested in the Easterly ROCMuni High Income Municipal Bond Fund (ticker symbols – RMHVX, RMJAX, or RHHIX), you may have experienced devastating losses during June 2025. Although marketed as a municipal bond fund, RMHVX held speculative assets that made it far riskier than many investors realized.

At Bakhtiari & Harrison, we are currently investigating the collapse of the Easterly ROCMuni Fund and helping investors understand their legal rights. If you suffered losses, this blog explainshow you may be able to pursue recovery.

What Happened to the Easterly ROCMuni Fund (RMHVX)?

In just a matter of weeks in June 2025, the Easterly ROCMuni Fund saw its net asset value cut in half, catching investors and advisors by surprise.

Key Facts:

Easterly ROCMuni Fund Assets under management fell from $232 million to just $25.1 million
Share price dropped from $6.36 to $3.09 between June 1 and June 23, 2025
Estimated investor losses total between $50 million and $100 million
Year-to-date return (as of late June): -57.34%

These weren’t just market fluctuations. The scale and speed of the collapse suggest a deeper issue with the fund’s structure and investment strategy.

Was Easterly ROCMuni Fund RMHVX Really a Traditional Municipal Bond Fund?

The Easterly ROCMuni High Income Municipal Bond Fund may have been misleadingly labeled. While it operated under the umbrella of a muni bond fund, its portfolio consisted mainly of high-risk, speculative debt.

Hidden Risks in the Portfolio:

Over 84% of holdings were below investment grade (D to BB+)
More than 50% of the fund’s assets were in Rule 144A private placements—illiquid and restricted securities not available on public markets
Investments were concentrated in junk-rated municipal bonds with limited transparency and liquidity

This mix gave the fund high income potential but also made it highly sensitive to market stress—especially in a downturn.

Suitability and FINRA Rule 2111

A suitability claim ranks among the most prevalent types of grievances that customers bring before a panel of securities arbitrators. This common occurrence prompts a critical question: why do investment professionals extensively probe into your investment experience, risk tolerance, and other financial aspects? Suitability attorneys Bakhtiari & Harrison represent investors in financial mismangement disputes.

What Does FINRA Rule 2111 Require?

The answer lies in FINRA’s suitability rule, formally known as FINRA Rule 2111. This rule is anchored in a fundamental principle that mandates brokerage firms and their associated persons—including brokers, financial advisers, or financial consultants—to engage in fair dealings with their customers. FINRA has developed comprehensive documentation to enlighten investors about the suitability rule. This effort aims to clarify why firms and their representatives must gather detailed information about a client’s financial circumstances.

Understanding the suitability rule is crucial for both investors and professionals within the securities industry. This rule ensures that any recommendations made by brokers or financial advisers are appropriate for the clients based on their financial needs, objectives, and unique circumstances. Such a requirement not only protects investors but also guides professionals in offering sound financial advice.

For individuals who believe their investment losses may be due to recommendations that were not suited to their financial situations, consulting with lawyers well-versed in securities law can be an invaluable step. These lawyers are adept at navigating the complexities of suitability claims. They provide the legal expertise needed to assess whether a brokerage firm or its associated persons have complied with the requisite standards of the suitability rule.

How Did the Easterly ROCMuni Fund Collapse So Quickly?

Here’s a timeline of how the RMHVX collapse unfolded:

March 2025

The fund reported $232 million in assets. Share prices were steady, and investors likely saw no signs of instability.

Early June 2025

As credit markets tightened and risk appetite decreased, investors began withdrawing funds. But the ROCMuni Fund was holding securities that couldn’t be sold easily or quickly.

Mid-June

On or around June 13, the fund began liquidating illiquid positions to meet redemptions. That forced selling—at distressed prices—accelerated the decline in Net Asset Value.

June 13–23:

NAV plummeted from $6.36 to $3.09 in just 10 days. Fund assets dropped by over 90%. Investors were left with heavy losses and few answers.

Understanding the Red Flags: Why This Fund Was So Risky

1. Liquidity Mismatch

The fund promised daily liquidity to investors but invested in assets that could not be easily sold. This created a dangerous gap when redemptions surged.

2. Speculative Risk Profile

Most municipal bond funds focus on investment-grade debt. RMHVX, on the other hand, focused on junk-rated bonds, which carry much higher default risk.

3. Concentration in Rule 144A Securities

These privately placed bonds have limited trading markets and are difficult to value, especially during periods of stress. For many retail investors, this kind of exposure was inappropriate.

Who Was Affected by the Easterly ROCMuni Fund RMHVX Collapse?

This wasn’t just a fund for institutional traders. Many retail investors, retirees, and conservative savers were caught off guard—often after being advised that this was a low-risk, income-generating fund.

If you were: promised a safe municipal bond fund, looking for stable income in retirement or told this investment matched your low to moderate risk tolerance…then your losses may be the result of misrepresentation or an unsuitable recommendation.

Can Easterly ROCMuni Fund Investors Recover Their Losses?

Possibly. If your financial advisor, broker, or investment firm failed to disclose the fund’s real risks or made recommendations inconsistent with your objectives, you may have a valid claim for damages for losses inovling the Easterly ROCMuni Fund.

At Bakhtiari & Harrison, we’re actively pursuing claims related to:

Unsuitable investment recommendations
Misleading fund disclosures
Failure to disclose liquidity and credit risk
Negligence by financial advisors or broker-dealers

Contact Bakhtiari & Harrison Today

If you suffered losses in the Easterly ROCMuni Fund (RMHVX, RMJAX, or RHHIX), you may be entitled to recover compensation. Bakhtiari & Harrison is a nationally recognized investment fraud law firm representing individual investors against brokerages, investment firms, and financial advisors. We have successfully recovered millions on behalf of clients who were misled or sold unsuitable investments, contact us.