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.

Elder Financial Fraud – How Seniors Are Targeted by Investment Scams

Elder financial fraud is one of the fastest-growing areas of investment misconduct. Seniors are frequently targeted by dishonest brokers, unlicensed individuals, and high-pressure sales operations that exploit trust, limited financial knowledge, and the desire for stable retirement income. When older investors fall victim to these schemes, the consequences are devastating—jeopardizing life savings and compromising long-term financial security.

Understanding how elder investment fraud occurs, why seniors are disproportionately targeted, and how an investment fraud lawyer can help recover losses is essential for protecting yourself or a loved one.

Why Seniors Are Vulnerable to Investment Fraud

While anyone can fall victim to fraud, seniors face unique challenges that make them attractive targets to unscrupulous advisors. Common reasons include:

1. Larger Retirement Savings
After decades of working, many seniors have accumulated substantial nest eggs—making them prime targets for fraudsters seeking quick access to large amounts of money.

2. Desire for Income Stability
Seniors often seek conservative, income-producing investments. Fraudsters exploit these preferences by promoting products falsely marketed as “safe” or “guaranteed.”

3. Changes in Cognitive or Physical Health
Age-related cognitive decline can make it harder to detect deception or understand complex financial products. Fraudsters deliberately target individuals in declining health.

4. High Trust in Professionals
Older adults often grew up in eras where trust in financial professionals, banks, and institutions was stronger. Scammers exploit this trust.

5. Social Isolation
Loneliness increases vulnerability. Con artists know that seniors living alone may be more receptive to unsolicited contact.

Common Types of Elder Investment Fraud

1. High-Pressure Sales of Illiquid Products
Seniors are frequently sold investments that lock up funds for long periods, such as non-traded REITs, private placements, and complicated annuities. Brokers misrepresent these products as “safe” despite high risks and lack of liquidity.

2. Ponzi Schemes
Older investors are especially targeted by Ponzi schemes promising stable income or “guaranteed” returns. When these schemes collapse, retirees lose everything.

3. Unsuitable Investments
FINRA rules require brokers to match investments to an investor’s profile. Retirees with low risk tolerance should never be placed in risky or speculative investments. Unsuitable recommendations to seniors are a common form of fraud.

4. Unauthorized Trading
Some brokers take advantage of seniors’ trust by placing trades without permission. Unauthorized activity is a serious violation and often leads to substantial losses.

5. Annuity Scams
Long-term annuities with large surrender fees are often marketed aggressively to seniors. Fraudsters hide lengthy lockup periods and high commissions.

6. Affinity Fraud
Seniors involved in religious groups, clubs, or community organizations are often targeted by fraudsters posing as trustworthy insiders.

7. Manipulation Through Caregivers or Relatives
Fraud sometimes comes from individuals who gain access to seniors’ finances under the guise of assistance or caregiving.

How Brokers Exploit Seniors

Dishonest brokers use several tactics to manipulate older investors:

Misrepresenting risks as minimal or non-existent
Overstating returns or “guarantees”
Pushing unnecessary account changes
Encouraging the liquidation of safe assets like CDs or Treasuries
Pressuring seniors to reinvest quickly
Withholding written documentation
Exploiting cognitive decline or confusion

These behaviors violate FINRA rules requiring honesty, suitability, and full disclosure.

Warning Signs of Elder Financial Fraud

Family members and seniors should watch for:

Sudden changes in investment strategy
Losses that seem unexplained or inconsistent with market conditions
Confusion about account activity
Missing or altered account statements
Multiple calls or messages from an advisor pushing new products
Difficulty contacting the broker
Large withdrawals or transfers without explanation
High-risk or illiquid investments appearing suddenly in the portfolio

If any of these signs appear, immediate action is critical.

How to Protect Seniors from Investment Fraud

1. Verify Licensing Through FINRA BrokerCheck
Confirm that the advisor is properly licensed and has no history of complaints or disciplinary actions.

2. Require Written Explanations
Insist on clear, written documentation for all investments and fees.

3. Monitor Statements Monthly
Regularly review transaction reports, trade confirmations, and portfolio composition.

4. Keep Family Members Involved
Trusted children or relatives can help identify red flags or irregular activity.

5. Avoid Unsolicited Offers
Educate seniors about the dangers of unsolicited calls, emails, or sales pitches.

6. Limit Trading Authority
Avoid granting discretionary trading authority unless absolutely necessary—and always in writing.

What to Do If You Suspect Elder Financial Fraud

Step 1: Gather Documentation
Collect all statements, emails, contracts, brochures, and notes. These materials are essential for establishing misconduct.

Step 2: Contact the Brokerage Firm
Notify the firm’s compliance department about the suspected misconduct. Firms must investigate claims promptly.

Step 3: Freeze Further Activity
Stop additional trades to prevent further losses. Transferring the account to a more trustworthy advisor may be necessary.

Step 4: Consult an Investment Fraud Lawyer
Elder fraud cases require specialized legal analysis. An attorney evaluates the situation, determines regulatory violations, and identifies which parties are liable—including brokers, firms, or third parties.

How an Investment Fraud Lawyer Proves Elder Fraud

To prove elder investment fraud, lawyers:

Analyze the senior’s risk tolerance and financial profile
Compare recommended investments to suitability rules
Review communication for misrepresentation or omission
Identify conflicts of interest or high commissions
Assess the brokerage firm’s supervision practices
Obtain testimony from financial experts
Demonstrate how the misconduct caused the losses

FINRA arbitrators take elder fraud seriously, especially when the investor was misled or intentionally targeted.

Legal Remedies for Elder Investment Fraud

Most cases are resolved through FINRA arbitration, which offers a streamlined and effective path to recovery. Seniors may recover:

Out-of-pocket losses
Lost income
Excess commissions and fees
Interest
Attorney fees in certain cases
Punitive damages for egregious misconduct

Elder fraud cases often result in significant awards, particularly when firms ignored red flags or failed to supervise advisors.

Why Time Is Critical

FINRA imposes a six-year eligibility deadline for filing arbitration claims. Delaying action can jeopardize the case. Additionally, documents and evidence become harder to obtain over time.

The Emotional and Psychological Toll on Seniors

Beyond financial harm, elder fraud causes profound emotional stress. Seniors often feel embarrassed, ashamed, or betrayed. These emotions can cause delays in reporting misconduct, making family support and legal guidance even more important.

Elder financial fraud is a serious and growing problem that threatens the safety and dignity of older investors. When seniors are misled, pressured, or deceived by brokers, they have legal rights to pursue recovery. FINRA arbitration offers a powerful tool to hold wrongdoers accountable and recover lost savings. If you or a loved one suspects elder investment fraud, immediate action is essential. To explore your legal options or begin a FINRA claim, contact Bakhtiari & Harrison.