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.

FINRA Expungement Explained – How to Remove a False Broker Record

In the highly regulated world of financial services, reputation is everything. For brokers and financial advisors, even a single false or misleading disclosure on a regulatory record can threaten career prospects, client relationships, and firm employment opportunities. The Financial Industry Regulatory Authority, or FINRA, maintains a central database known as the Central Registration Depository (CRD) and its public interface, BrokerCheck.

These platforms are designed to promote transparency and protect investors—but when inaccurate information appears, it can unfairly damage a professional’s standing. The only method to permanently remove such false or defamatory entries is through the FINRA expungement process, a complex legal procedure that requires arbitration panel approval and judicial confirmation. For professionals seeking to clear their name, working with an experienced FINRA expungement lawyer is essential.

What Is FINRA Expungement?

Expungement is the formal removal of customer dispute information or other inaccurate data from the CRD system. It is considered an extraordinary remedy, granted only when the information is shown to be factually impossible, clearly erroneous, or demonstrably false. Once expunged, the disclosure no longer appears on BrokerCheck or in FINRA’s records. The process exists to balance two competing priorities: maintaining public investor protection through transparency and protecting registered professionals from unjust reputational harm.

Why Expungement Matters

Even unproven or withdrawn complaints can stain a broker’s record indefinitely. When clients or firms use BrokerCheck to evaluate potential advisors, they may see the disclosure and assume guilt without context. This can lead to lost employment opportunities, damaged credibility, and reduced client trust. For many brokers, expungement is not about hiding misconduct but correcting inaccuracies that misrepresent the truth.

A single mistaken identity claim, a frivolous customer complaint, or a claim that was settled for business reasons rather than wrongdoing can still appear publicly for years. A FINRA expungement lawyer understands how to demonstrate to an arbitration panel that such information meets the strict criteria for removal.

The FINRA Expungement Process

Expungement follows a detailed, multi-step procedure that must be executed precisely.

1. Filing the Expungement Request
The process typically begins by filing a claim in FINRA arbitration. If the disclosure originated from a customer complaint, the expungement request is often filed as part of that arbitration or after it concludes. In other cases, brokers may file a separate “expungement-only” arbitration claim. The statement of claim must clearly explain the reasons for expungement and cite the relevant FINRA rules, primarily FINRA Rule 2080 and Rule 12805.

2. Notice to Involved Parties
FINRA requires that all parties involved in the original dispute be notified of the expungement request. This includes the customer who filed the complaint and the brokerage firm that reported it. The purpose is to allow these parties to participate in or object to the expungement hearing.

3. Arbitration Hearing
An independent FINRA arbitration panel reviews the evidence and determines whether the expungement criteria are satisfied. The broker, represented by counsel, must present documentation, witness testimony, and often expert analysis to prove that the complaint was false, impossible, or clearly erroneous. The panel then issues a written decision stating its findings and rationale.

4. Court Confirmation
Even after receiving a favorable arbitration award recommending expungement, the process is not complete. The award must be confirmed by a court of competent jurisdiction. This judicial step ensures that expungement decisions are subject to public oversight and legal validation. Once confirmed, FINRA removes the specified disclosure from the CRD system.

The Legal Standards for Expungement

FINRA Rule 2080 defines three narrow grounds under which expungement may be granted:

The claim, allegation, or information is factually impossible or clearly erroneous.
The registered person was not involved in the alleged misconduct.
The claim, allegation, or information is false.

These standards set a high bar. Expungement is not available merely because a case settled, the broker disagreed with the outcome, or the complaint was old. The burden rests entirely on the applicant to prove that the information meets one of the above conditions. Arbitrators must make specific written findings supporting their decision.

Why Expungement Is Difficult Without a Lawyer

FINRA’s rules surrounding expungement are highly technical, and the process has become more stringent over time due to concerns about overuse. Attempting expungement without legal representation often leads to procedural errors or denials. A FINRA expungement lawyer understands how to prepare persuasive written submissions, gather supporting evidence, and present testimony effectively before the arbitration panel.

Attorneys also manage communication with FINRA staff, ensure compliance with notice requirements, and navigate the judicial confirmation process after arbitration. Each phase requires careful timing and documentation; missing a deadline or filing incorrectly can invalidate the entire effort.

Types of Cases Eligible for Expungement

While every situation is unique, common scenarios where expungement may be appropriate include:

False or Mistaken Identity Claims: A broker was named in a complaint despite having no involvement in the client’s account.
Frivolous or Withdrawn Complaints: The customer withdrew the claim, or it was dismissed with no findings of wrongdoing.
Settlements Without Fault: A firm settled for business reasons, but the individual broker did not admit or commit misconduct.
Clerical or Data Entry Errors: Incorrect information was entered into the system during reporting.

Each case requires compelling documentation, including client statements, firm correspondence, and regulatory filings that demonstrate the inaccuracy.

Preparing for an Expungement Hearing

A FINRA expungement lawyer begins by reviewing the broker’s entire CRD record to identify which disclosures meet expungement criteria. They then collect all relevant evidence, such as arbitration decisions, dismissal orders, or affidavits from supervisors confirming non-involvement. During the hearing, the lawyer presents the case to arbitrators clearly and concisely, explaining why the information should not remain public.

Arbitrators often question the motives behind expungement requests, so credibility is crucial. The attorney ensures the presentation focuses on fairness and factual correction rather than concealment. When successful, arbitrators issue a detailed written decision that supports the recommendation for expungement, forming the basis for court confirmation.

The Importance of Rule Compliance

Because FINRA places great emphasis on transparency, failure to adhere to its procedural rules can jeopardize the expungement. Lawyers ensure compliance with Rule 12805’s requirements for recorded hearings, written findings, and explicit reasoning. They also confirm that Rule 2080 standards are addressed directly in the claim and in the final award.

Without precise compliance, even an arbitrator’s favorable recommendation can be overturned at the court confirmation stage. Skilled attorneys prevent these costly mistakes by managing every procedural detail.

The Impact of a Successful Expungement

For brokers, expungement can be career-saving. A clean record restores reputation, rebuilds client trust, and opens opportunities for advancement within the industry. It also ensures that BrokerCheck provides accurate information to the public, promoting fairness for both professionals and investors.

However, expungement does not erase disciplinary actions imposed by regulators; it only removes customer dispute disclosures or similar entries. A FINRA expungement lawyer helps clients understand what can and cannot be cleared and ensures expectations align with regulatory limitations.

Costs and Timelines

The cost of expungement varies depending on the complexity of the case and whether a hearing is contested. Attorneys typically charge flat or hourly fees, and FINRA imposes filing fees and panel costs. The process can take several months from filing to final court confirmation. While this may seem lengthy, the long-term value of restoring one’s professional reputation often far outweighs the expense.

The Broader Value of Expungement

Expungement benefits not only individual brokers but the integrity of the industry as a whole. When false records remain uncorrected, investors may make decisions based on misinformation. Ensuring that BrokerCheck reflects only accurate, verified data strengthens investor confidence and maintains fairness across the regulatory system.

The FINRA expungement process is complex, technical, and highly consequential. For financial professionals, it represents the only path to correct false or misleading information that can derail a career. Because success depends on meeting strict legal criteria and procedural rules, working with a FINRA expungement lawyer is essential. These attorneys understand how to present the strongest possible case to arbitration panels and guide clients through the final court confirmation stage. Expungement is not about hiding the truth—it is about ensuring that truth, and only truth, defines a professional’s record. For personalized guidance on expungement eligibility or representation through the process, contact Bakhtiari & Harrison.