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.

Is Your FINRA Record Limiting Your Career?

The Financial Industry Regulatory Authority (FINRA) plays a crucial role in regulating the activities of financial advisors and brokerage firms in the United States. Your FINRA record can significantly impact your career in the financial industry, influencing your reputation and job prospects. Understanding the importance of this record and how to manage it is essential for career growth and stability in the financial sector. This article explores the potential impact of a negative FINRA record on your career prospects and provides guidance on how to overcome it.

What is FINRA?

FINRA is a non-governmental organization that oversees the behavior of financial advisors and brokerage firms to ensure compliance with industry regulations. It aims to protect investors by maintaining the integrity of the financial markets. FINRA’s responsibilities include licensing and regulating brokerage firms and their registered representatives, enforcing compliance with federal securities laws, and overseeing dispute resolution processes such as arbitration. As a self-regulatory organization, FINRA operates under the Securities and Exchange Commission (SEC) supervision.

Why Does Your FINRA Record Matter?

Your FINRA record reflects your professional conduct and any disciplinary actions taken against you. It includes information about regulatory history, disclosure events, customer disputes, and disciplinary actions. A clean FINRA record can enhance your reputation and career prospects, while a negative record can limit your opportunities and raise concerns among potential employers and clients. Maintaining a positive regulatory history in the highly regulated financial industry is crucial for career advancement.

How Does Your FINRA Record Affect Your Career?

A negative FINRA record can hinder your job opportunities, as potential employers may view you as a risk. Companies in the financial industry prioritize compliance and integrity, making a clean regulatory history a critical factor in hiring decisions. Understanding the implications of your FINRA record on your career can help you take proactive steps to address any issues and improve your prospects.

A negative record can affect your career in several ways:

Reputation: A negative FINRA record can damage your professional reputation, making building trust with clients and colleagues difficult.
Job Opportunities: Employers may hesitate to hire individuals with a negative FINRA record due to concerns about potential risks and regulatory scrutiny.
Licensing and Certifications: A negative record can impact your ability to obtain and maintain necessary licenses and certifications, further limiting your career opportunities.
Career Advancement: Negative marks on your record can hinder your ability to advance within your current organization or move to a higher position elsewhere.

Understanding Your FINRA Record

Your FINRA record includes various elements such as employment history, licenses held, regulatory actions, customer complaints, and public records. It is crucial to review your record regularly to ensure its accuracy and address any discrepancies promptly. Key components of your record include:

BrokerCheck: A tool FINRA provides that allows you to view your regulatory history and public records. BrokerCheck is an essential resource for financial advisors and clients alike, providing transparency and accountability in the industry.
Disclosure Events: Information about any regulatory actions, disciplinary actions, or customer disputes. These events can significantly impact your career prospects and should be carefully managed.
U4 and U5 Forms: Forms used to register and terminate employment with FINRA, containing detailed information about your employment history and any disclosure events. Accurate and up-to-date information on these forms is crucial for maintaining a clean FINRA record.

How to Access Your FINRA Record?

You can request a copy of your FINRA record through FINRA’s BrokerCheck website. Regularly reviewing your record can help you identify and correct any inaccuracies. BrokerCheck provides a comprehensive overview of your regulatory history, including any disclosure events, disciplinary actions, and customer disputes. Ensuring your accurate and up-to-date record is essential for maintaining a positive professional reputation.

How to Interpret Your FINRA Record?

Understanding the information included in your FINRA record is crucial. Any inaccuracies or negative marks can impact your career prospects. Key areas to focus on include:

Regulatory History: Details of any regulatory actions taken against you. These actions can include fines, suspensions, or other penalties regulatory bodies impose.
Customer Disputes: Information about any complaints filed by customers. Customer disputes can particularly damage your reputation and should be addressed promptly and professionally.
Disciplinary Actions: Records of any disciplinary measures taken by FINRA or other regulatory bodies. Disciplinary actions can have long-lasting effects on your career and should be avoided whenever possible.

The Impact of Your FINRA Record

Your FINRA record is important as it reflects your professional reputation and integrity. Employers may use your record to evaluate your suitability for employment in the financial industry. A clean record can enhance your job prospects, while a negative record can limit your career opportunities. Understanding the impact of your FINRA record is essential for managing your career effectively.

How Does Your FINRA Record Affect Your Job Prospects?

A clean FINRA record can significantly enhance your job prospects. Employers in the financial industry prioritize candidates with a positive regulatory history and no disciplinary actions. Conversely, a negative record may limit your career opportunities and make it challenging to secure employment. Maintaining a clean FINRA record is crucial for career advancement and job security.

Employers often use FINRA’s BrokerCheck to vet potential hires, looking for any red flags that might indicate a risk. A negative record can lead to questions about your professional judgment and reliability, which can deter employers from offering you a position. Additionally, a negative record can affect your ability to build a client base, as clients may also use BrokerCheck to assess your credibility.

Can You Still Find Employment with a Negative FINRA Record?

While a negative FINRA record can pose challenges, finding employment in the financial industry is still possible. Taking proactive steps to address any issues on your record, such as seeking expungement or demonstrating a commitment to compliance, can improve your chances of securing a job. Employers may be willing to overlook past issues if you can show that you have taken steps to rectify them and are committed to maintaining a clean record in the future.

Strategies for finding employment with a negative FINRA record include:

Transparency: Be honest with potential employers about your record. Explain the circumstances and what you have done to address any issues.
Professional Development: Pursue additional certifications or education to demonstrate your commitment to professional growth and compliance.
Networking: Leverage your professional network to find opportunities. Personal recommendations can help mitigate concerns about your record.
Specialization: Focus on areas of the financial industry where your skills and experience can overshadow past issues. Specialized knowledge can make you a valuable asset despite a negative record.

Improving Your FINRA Record

If you believe there is inaccurate information on your FINRA record, you can dispute it through FINRA’s dispute resolution process. Taking action to rectify any discrepancies is essential for maintaining a clean record. Key steps include:

Expungement: Seeking the removal of inaccurate or unjust negative marks from your record. Expungement can help you eliminate damaging information and improve your career prospects. The expungement process can be complex and may require legal assistance, but successfully removing negative marks can significantly enhance your record.
Arbitration: Participating in FINRA’s arbitration process to resolve disputes and address issues on your record. Arbitration can provide a fair and impartial resolution to conflicts and help you maintain a clean record. Engaging in arbitration demonstrates your commitment to resolving disputes professionally and can help restore your reputation.

How Long Do Negative Records Stay on Your FINRA Record?

Negative records on your FINRA record typically stay for a specified period, depending on the nature of the violation. Understanding the duration of these marks and their implications is crucial for managing your career. Some negative records may remain on your record indefinitely, while others may be removed after a certain period.

For example:

Customer Complaints: These typically stay on your record for a minimum of two years.
Regulatory Actions: These can remain on your record permanently unless expunged.
Criminal Disclosures: These also tend to stay on your record permanently, reflecting any criminal convictions.

Understanding the timeline for different types of negative marks can help you plan your career strategy and take steps to mitigate their impact.

How to Maintain a Clean FINRA Record?

To maintain a clean FINRA record, adhering to industry regulations and ethical standards is crucial. Building a positive reputation in the financial industry can help you avoid disciplinary actions. Key practices include:

Compliance: Ensuring strict adherence to regulatory requirements and ethical guidelines. Compliance is essential for maintaining a clean record and avoiding disciplinary actions. Staying informed about regulatory changes and implementing robust compliance programs can help you avoid unintentional violations.
Professional Conduct: Maintaining high standards of professional behavior and integrity. Professional conduct is critical for building trust with clients and colleagues and avoiding negative marks on your record. Demonstrating ethical behavior and sound judgment in all professional interactions can help you maintain a positive record.
Regular Review: Periodically review your FINRA record to ensure its accuracy. Regular reviews can help you identify and address any discrepancies before they become major issues.
Continuing Education: Engaging in ongoing professional development to stay updated on industry best practices and regulatory changes. Continuing education can help you maintain a high level of competence and compliance.

Taking Control of Your Career

Taking proactive steps to address any issues on your FINRA record can help you overcome challenges and enhance your career prospects. Leveraging your FINRA record as a tool for career growth involves:

Addressing Discrepancies: Proactively resolving any inaccuracies or negative marks on your record. Addressing discrepancies can help you maintain a clean record and improve your career prospects.
Seeking Professional Guidance: Consult compliance officers, legal professionals, or industry experts for assistance. Professional guidance can help you navigate the complexities of the financial industry and maintain a clean record.

What Steps Can You Take to Overcome a Negative FINRA Record?

To overcome a negative FINRA record, consider the following steps:

Dispute Resolution: Engage in FINRA’s dispute resolution process to address inaccuracies. Dispute resolution can help you rectify errors and maintain a clean record.
Professional Development: Demonstrate a commitment to compliance and ethical conduct through ongoing education and professional development. Professional development can help you stay current with industry regulations and maintain a clean record.
Reputation Management: Actively manage your professional reputation by engaging in positive activities such as community involvement, mentoring, and professional associations. Building a strong professional network and reputation can help offset the impact of negative marks on your record.
Documenting Improvements: Keep detailed records of any steps you take to address and improve your FINRA record. Documentation can provide evidence of your commitment to resolving issues and maintaining high standards.

How Can You Use Your FINRA Record to Your Advantage?

You can use your clean FINRA record as a competitive advantage in the job market. Highlighting your positive record can demonstrate your commitment to compliance and ethical conduct, making you a more attractive candidate to potential employers. Emphasizing your clean record can help you stand out in a competitive job market and secure better career opportunities.

Highlighting Compliance: Emphasize your adherence to regulatory standards and ethical guidelines in your resume and during interviews. Highlighting your commitment to compliance can reassure employers of your reliability and professionalism.
Showcasing Achievements: Use your clean record to showcase your achievements and successes in the financial industry. Demonstrating a track record of success can help you build credibility and attract job offers.
Leveraging Networking Opportunities: Use your clean record to build and leverage professional relationships. Networking can provide valuable opportunities for career advancement and growth.

Where to Seek Help for Improving Your FINRA Record?

You can seek assistance from compliance officers, legal professionals, or industry experts to help you improve your FINRA record. Taking proactive steps to address any issues on your record is essential for maintaining a positive regulatory history and advancing your career. Professional guidance can help you navigate the complexities of the financial industry and maintain a clean record.

Compliance Officers: Consulting with compliance officers can help you understand and adhere to regulatory requirements. Compliance officers can provide valuable insights and guidance for maintaining a clean record.
Legal Professionals: Seeking legal assistance can help you address any legal issues related to your FINRA record. Legal professionals can assist with dispute resolution, expungement, and other legal matters.
Industry Experts: Engaging with industry experts can provide valuable advice and support for maintaining a clean record. Industry experts can help you stay informed about regulatory changes and best practices.

Additional Insights and Considerations

The Role of Compliance in Maintaining a Clean FINRA Record

Compliance is a cornerstone of maintaining a clean FINRA record. Financial advisors must stay informed about regulatory changes and ensure their practices align with industry standards. Regular training and professional development can help advisors stay current with compliance requirements and avoid unintentional violations.

Understanding Disclosure Events and Their Impact

Disclosure events are significant incidents that must be reported on your FINRA record. These events can include customer complaints, regulatory actions, and criminal charges. Understanding the impact of disclosure events is crucial for managing your career and maintaining a clean record. Proactively addressing disclosure events and demonstrating your commitment to resolving issues can help mitigate their impact on your career.

Navigating the Arbitration Process

The arbitration process is a key component of FINRA’s dispute resolution system. Understanding how arbitration works and navigating the process effectively can help you resolve disputes and maintain a clean record. Engaging in arbitration demonstrates your commitment to resolving conflicts professionally and can help restore your reputation.

The Importance of Documentation

Maintaining thorough documentation of your professional activities and any steps taken to address issues on your FINRA record is essential. Documentation can provide evidence of your commitment to compliance and ethical conduct, helping to build trust with employers and clients.

Understanding the importance of your FINRA record in your career is crucial for financial advisors, investors, and compliance officers. Taking proactive steps to maintain a clean FINRA record and using it as a tool for career growth can help you succeed in the financial industry. Regularly reviewing and addressing any issues on your record can enhance your professional reputation and secure better job opportunities.

Maintaining a clean FINRA record requires a commitment to compliance, ethical conduct, and ongoing professional development. By proactively managing your record and addressing any issues, you can build a successful and rewarding career in the financial industry. Whether you seek to improve your current record or maintain a positive regulatory history, understanding the significance of your FINRA record and taking the necessary steps to manage it effectively is essential for long-term career success.