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.

The Difference Between a FINRA Lawyer and a Securities Attorney

When investors suffer losses or brokers face customer complaints, one of the first questions is: “What kind of lawyer do I need?” While the terms FINRA lawyer and securities attorney are often used interchangeably, there are important distinctions between the two. Both practice within the field of securities law, but their areas of focus, forums of practice, and strategic approaches differ significantly. Understanding these differences helps investors, brokers, and firms choose the right type of legal representation for their situation.

The Scope of Securities Law

Securities law governs how investments are sold, traded, and managed. It covers everything from stock offerings and mutual funds to private placements and derivatives. It also sets rules for financial advisors, brokerage firms, and investment companies. The primary regulatory agencies overseeing these activities are the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, known as FINRA. A securities attorney may handle a wide range of issues involving these agencies, including regulatory compliance, enforcement actions, fraud investigations, or civil lawsuits. A FINRA lawyer, on the other hand, focuses specifically on disputes resolved through FINRA’s arbitration and mediation forums.

What Is a FINRA Lawyer?

A FINRA lawyer is a specialized attorney who represents clients in cases filed under FINRA’s dispute resolution process. FINRA is a self-regulatory organization that oversees brokerage firms and their registered representatives. Most brokerage account agreements require customers to resolve disputes through FINRA arbitration instead of going to court. Therefore, if an investor claims that a broker or firm engaged in misconduct—such as unsuitable recommendations, unauthorized trading, or misrepresentation—the case will almost always proceed before a FINRA arbitration panel.

A FINRA lawyer understands the procedural rules, discovery limits, and hearing structures that govern arbitration. They know how to draft effective Statements of Claim, select arbitrators strategically, manage discovery efficiently, and present complex financial evidence in a format that resonates with the panel. This expertise is highly specific. Unlike traditional court litigation, FINRA arbitration has no jury, limited appeal rights, and strict filing deadlines. Missing a procedural requirement can jeopardize an otherwise valid claim, which is why experienced FINRA lawyers are indispensable in these cases.

FINRA lawyers represent both investors seeking to recover losses and brokers or firms defending their records. For investors, the lawyer’s goal is to prove violations of FINRA rules and obtain financial compensation. For brokers or firms, it is to minimize exposure and protect professional standing.

What Is a Securities Attorney?

A securities attorney has a broader practice scope. They may represent corporations, institutional investors, brokerage firms, or individuals in various legal contexts. Their work often extends beyond FINRA arbitration to include SEC investigations, civil lawsuits in federal or state court, compliance counseling, and regulatory filings. Securities attorneys advise on public offerings, mergers, acquisitions, and internal compliance programs. In enforcement matters, they defend clients accused of violating securities laws before the SEC or state regulators.

Securities attorneys who specialize in litigation may file or defend class-action lawsuits, handle insider trading cases, or pursue civil fraud claims. While FINRA lawyers focus on arbitration under FINRA’s jurisdiction, securities attorneys operate across multiple venues and legal frameworks.

Key Differences Between a FINRA Lawyer and a Securities Attorney

Though their work overlaps, several distinctions separate these two roles:
1. Jurisdiction and Forum: FINRA lawyers handle disputes within the FINRA arbitration and mediation system, while securities attorneys appear in court or before the SEC.
2. Nature of Clients: FINRA lawyers frequently represent individual investors or financial professionals in disputes involving brokerage misconduct. Securities attorneys may represent corporations, investment banks, or large funds in broader legal and regulatory matters.
3. Procedures and Remedies: Arbitration under FINRA is faster and more private than court litigation, but awards are final and binding. Court litigation offers discovery and appeal rights but involves higher costs and longer timelines.
4. Specialization: FINRA lawyers master arbitration-specific strategies and rules, while securities attorneys require a comprehensive understanding of securities regulation, compliance, and corporate law.

In short, all FINRA lawyers are securities attorneys, but not all securities attorneys are FINRA lawyers.

When to Hire a FINRA Lawyer

Investors should consult a FINRA lawyer when they suspect misconduct by a broker or brokerage firm that resulted in financial loss. Common reasons include:

Unauthorized trading in an account
Misrepresentation or omission of investment risks
Excessive trading for commissions (churning)
Unsuitable investment recommendations
Breach of fiduciary duty or negligence
Failure by the firm to supervise brokers

Brokers and financial advisors also hire FINRA lawyers when they face customer complaints, disciplinary actions, or the need for record expungement. Because FINRA proceedings differ from court litigation, experience within this specific forum is critical.

A FINRA lawyer will evaluate the investor’s documentation, calculate damages, and determine whether the claim qualifies for arbitration. They handle all filings, respond to motions, and present evidence at the hearing. Their familiarity with FINRA’s rules—such as the six-year eligibility rule and discovery guide—helps avoid procedural pitfalls that could derail a case.

When to Hire a Securities Attorney

A securities attorney is ideal for matters that extend beyond arbitration or involve broader regulatory and corporate issues. This includes:

SEC or state enforcement actions
Insider trading or market manipulation allegations
Complex investment fraud schemes involving multiple entities
Corporate compliance and disclosure obligations
Civil litigation involving securities offerings or investor disputes

For instance, if an investor’s losses stem from a Ponzi scheme involving multiple firms or unregistered securities, a securities attorney with federal litigation experience may be best suited to file suit in court. Similarly, if a broker faces SEC enforcement for alleged violations of the Securities Exchange Act, a securities attorney would defend the case.

Why the Distinction Matters

Choosing between a FINRA lawyer and a securities attorney affects strategy, cost, and outcomes. Arbitration emphasizes efficiency and limited discovery, making specialized FINRA knowledge essential. Court litigation, by contrast, demands familiarity with procedural rules, evidentiary standards, and precedent-based arguments. Investors who hire the wrong type of attorney risk delays or reduced recovery if their lawyer lacks the specific experience required for the chosen forum.

Additionally, many cases involve overlapping jurisdictions. For example, a FINRA arbitration claim might proceed simultaneously with an SEC investigation or state regulatory inquiry. In such situations, coordination between a FINRA lawyer and a broader securities attorney is vital to ensure consistent legal strategy and protect against conflicting outcomes.

How FINRA and Securities Attorneys Work Together

In complex matters, both types of attorneys may collaborate. A FINRA lawyer might handle the arbitration claim while a securities attorney manages related court or regulatory proceedings. Together, they ensure comprehensive representation, addressing both financial recovery and compliance implications.

The Investor Perspective

From an investor’s point of view, the choice often depends on where the claim will be filed. Because nearly all retail investment accounts include mandatory FINRA arbitration clauses, a FINRA lawyer is usually the right first step. If the issue expands to include criminal or regulatory components, the investor’s FINRA counsel can coordinate with a securities attorney specializing in those areas. This partnership ensures that the investor’s rights are protected on every front.

The Broker and Firm Perspective

For brokers or firms facing disciplinary complaints or expungement issues, hiring a FINRA lawyer with experience in defending professional records is equally important. These lawyers understand how disciplinary disclosures impact a broker’s CRD and BrokerCheck profile. They also know the procedures for pursuing expungement, responding to FINRA inquiries, and preparing for testimony. Securities attorneys, meanwhile, assist firms with compliance reviews, internal investigations, and regulatory audits to prevent future disputes.

The Growing Importance of Specialization

The financial industry’s increasing complexity means specialization is no longer optional. With the rise of digital assets, algorithmic trading, and complex derivatives, the regulatory environment is constantly evolving. A FINRA lawyer must stay current with arbitration rule changes and disciplinary trends, while a securities attorney must track new SEC guidance and court precedents. Investors and professionals alike benefit from this focused expertise.

Although FINRA lawyers and securities attorneys both operate in the realm of investment law, their roles, forums, and skill sets differ in meaningful ways. FINRA lawyers are arbitration specialists who pursue or defend claims within FINRA’s dispute resolution system, while securities attorneys handle broader legal and regulatory matters in court or before agencies like the SEC. Understanding which professional to hire ensures that legal strategy aligns with the proper venue and maximizes the chances of success. Whether an investor is seeking recovery or a financial professional needs defense against allegations, the right representation can make all the difference. For further guidance on choosing appropriate counsel or pursuing an investment dispute, contact Bakhtiari & Harrison.