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.

Estate Planning Basics

Effective estate planning involves not only creating essential documents like wills, trusts, and powers of attorney but also ensuring these documents are stored securely and are accessible to the appropriate individuals when needed. Proper storage safeguards your wishes and facilitates a smoother process for your loved ones during challenging times.

Key Estate Planning Documents to Secure

Before determining the best storage methods, it’s crucial to identify and organize your essential estate planning documents:

Last Will and Testament: Specifies the distribution of your assets and the care of any minor children.
Revocable Living Trust: Allows for the management and distribution of your assets during your lifetime and after death, potentially bypassing probate.
Durable Power of Attorney: Authorizes someone to make financial decisions on your behalf if you become incapacitated.
Healthcare Power of Attorney: Designates an individual to make medical decisions for you if you’re unable to do so.
Advance Healthcare Directive (Living Will): Outlines your preferences for medical treatment in end-of-life situations.
Beneficiary Designations: Documents that name beneficiaries for accounts like life insurance policies, retirement accounts, and payable-on-death bank accounts.
Financial Records: Includes bank account information, investment portfolios, property deeds, and titles.
Digital Asset Inventory: A list of your digital accounts, including login credentials for online banking, social media, and email accounts.

Best Practices for Storing Estate Planning Documents

Home Storage in a Fireproof and Waterproof SafeStoring your estate planning documents at home provides immediate access and control. Investing in a high-quality, fireproof, and waterproof safe ensures protection against natural disasters and unauthorized access. Place the safe in a secure yet accessible location, and inform trusted individuals, such as your executor or attorney-in-fact, about its existence and how to access it.
Safe Deposit BoxA safe deposit box at a financial institution offers a high level of security for your important documents. However, access can be an issue, especially immediately after death, as banks may seal the box until probate is initiated. To mitigate this, consider adding a trusted individual, like your executor, as a co-owner of the box. Ensure they have the necessary authorization and keys to access the contents when needed.
Attorney’s OfficeMany estate planning attorneys offer to store original copies of your documents in secure facilities. This option ensures that your documents are kept safe and can be easily accessed by your legal representative. Be aware of any potential fees associated with this service and have a plan in place in case the attorney retires or the firm relocates.
Digital Storage SolutionsIn the digital age, storing electronic copies of your estate planning documents can provide convenience and additional security. Utilize encrypted cloud storage services to safeguard your documents against loss or damage. Ensure that your digital storage method is secure and that trusted individuals know how to access these files. Remember, electronic copies may not be legally recognized in all jurisdictions, so maintaining original hard copies is still essential.
Trusted Family Member or FriendEntrusting a copy of your estate planning documents to a reliable family member or friend can be beneficial, especially if they are named in roles such as executor or power of attorney. Ensure this individual understands the responsibility and knows the location of the original documents. This approach provides a backup and ensures that someone you trust has immediate access if needed.

Additional Considerations

Communication: Clearly inform all relevant parties—such as executors, trustees, and agents under powers of attorney—about the location of your estate planning documents and how to access them. This communication prevents delays and confusion during critical times.
Regular Updates: Review and update your estate planning documents periodically, especially after significant life events like marriage, divorce, the birth of a child, or substantial changes in assets. Ensure that all stored copies, both physical and digital, reflect the most current versions.
Security Measures: Whether storing documents physically or digitally, implement robust security measures. For physical documents, this means using secure, fireproof, and waterproof storage solutions. For digital documents, ensure that storage solutions are encrypted and that access credentials are securely shared with trusted individuals.

Proper storage of your estate planning documents is a critical component of ensuring that your wishes are honored and that your loved ones can efficiently manage your affairs when the time comes. By selecting appropriate storage solutions and maintaining clear communication with trusted individuals, you can provide peace of mind for yourself and your beneficiaries.

Why Bakhtiari & Harrison

If you need assistance with organizing, updating, or securely storing your estate planning documents, the experienced professionals at Bakhtiari & Harrison are here to help. We offer comprehensive FINRA arbitration and litigation services tailored to your unique needs. Contact us today to schedule a consultation and ensure that your legacy is protected.