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.

How Do You Recover from Investment Fraud?

Taking swift and informed action can help you recover from investment fraud and regain some or all of your losses. While no recovery method is guaranteed, there are several steps you can take to address the situation and work toward financial restoration. Here’s a comprehensive guide on how to recover from investment fraud.

How Do You Recover From Investment Fraud?

Before you can recover from investment fraud, it’s important to understand exactly how the fraud occurred. Investment fraud typically involves:

Ponzi or Pyramid Schemes: Fraudsters use funds from new investors to pay earlier investors.
Misrepresentation: False or misleading claims about an investment’s potential returns or risks.
Unauthorized Trading: Brokers making trades without your permission.
Breach of Fiduciary Duty: Financial advisors acting against your best interests.

By recognizing the type of fraud, you’ll be better equipped to determine your recovery options.

Mitigate or Cease Further Losses

Once you suspect fraud, take immediate steps to prevent further financial damage:

Cut Off Communication: Stop all interactions with the individual or entity involved.
Freeze Accounts: Contact your financial institution to freeze any accounts linked to the fraud.
Change Access Details: Update passwords and secure any financial accounts to prevent unauthorized access.

Acting quickly can help protect the remaining assets in your control.

Gather Evidence

Documenting the fraudulent activity is critical for building a strong case for recovery. Collect:

Investment Records: Contracts, agreements, or prospectuses.
Transaction Details: Statements and receipts showing money transfers.
Communication Logs: Emails, text messages, or voicemails from the perpetrator.
Marketing Materials: Brochures, advertisements, or presentations used to solicit the investment.

Having organized evidence will support your claim and make it easier to pursue legal action, file complaints and recover from investment fraud.

File a Complaint with Regulatory Authorities

Reporting the fraud to the appropriate regulatory agencies can help initiate an investigation and provide a pathway for recovery:

The Securities and Exchange Commission (SEC): File a complaint through the SEC’s online portal if securities (stocks, bonds, etc.) were involved.
Financial Industry Regulatory Authority (FINRA): Report broker misconduct or disputes involving brokerage firms.
State Securities Regulators: Contact your state’s securities regulator for localized fraud cases.
Federal Trade Commission (FTC): Report broader investment scams such as Ponzi or pyramid schemes.

These agencies may investigate and, in some cases, establish restitution funds for victims.

Consider Legal Action

Recovering losses often requires legal action. Consulting an experienced investment fraud attorney is crucial to navigating this complex process and to recover from investment fraud. An attorney can:

Evaluate Your Case: Assess the evidence and determine the viability of your claim.
Identify Responsible Parties: Investigate all entities involved in the fraud, including individuals and institutions.
Pursue Litigation or Arbitration: Represent you in court or arbitration proceedings to recover financial damages.

Attorneys like those at Bakhtiari & Harrison specialize in securities fraud cases and can guide you through the legal process effectively.

Explore Recovery Options

There are several pathways for recovering your losses, depending on the nature of the fraud:

Arbitration
If a broker or financial advisor is involved, arbitration through FINRA may be an option. Arbitration is often faster and less expensive than litigation to recover from investment fraud.
Civil Lawsuits
You can file a lawsuit against the fraudulent party to seek compensation for your losses. This may include damages for financial harm and, in some cases, punitive damages.
Restitution Funds
Regulatory agencies like the SEC may establish restitution funds for victims of large-scale fraud schemes. Check with the relevant agency to see if such a fund is available for your case.
Bank or Insurance Recovery
If the fraud involves a licensed broker or financial advisor, sometimes a firm’s errors and omissions insurance may assist you to recover from investment fraud.

Stay Informed About Your Case

After initiating a complaint or legal action, stay engaged with the process:

Monitor Progress: Keep track of case updates and provide any additional information requested by authorities or your attorney.
Communicate Regularly: Stay in touch with your legal team to ensure you understand the next steps.
Be Patient: Recovery can take time, especially in complex fraud cases involving multiple victims.

Protect Yourself in the Future

Once you’ve addressed the immediate impact of fraud, focus on preventing future risks:

Verify Credentials: Research brokers and advisors through tools like FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure database.
Understand Investment Risks: Avoid opportunities that promise guaranteed high returns or seem too good to be true.
Monitor Accounts: Regularly review statements and transactions to spot unusual activity early.
Educate Yourself: Learn about common scams and how to recognize them.

Why Choose Bakhtiari & Harrison?

Recover from investment fraud, you don’t have to face an uncertain path alone. Bakhtiari & Harrison are experienced securities attorneys who assist investors to recover from investment fraud losses and work to rebuild their financial future. With a proven track record of success and a commitment to personalized service, they provide the expertise and support you need to navigate this challenging time. If you’ve been a victim of investment fraud, don’t wait to take action.

Contact Bakhtiari & Harrison today for a consultation. Their skilled attorneys will guide you through the recovery process, fight for your rights, and work tirelessly to help you reclaim what you’ve lost.