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.

When Your Online Brokerage Platform Becomes a Liability: Understanding Your Rights After System Failures

You watched the market surge. An opportunity you’d researched, waited for, and finally seized. You logged into your online brokerage account —the portal to your financial future —feeling confident. With a few clicks, you entered your trades – buy orders for stocks poised to break out, sell orders to lock in hard-earned profits. The system processed them. You saw the confirmations flash across your screen. Relief. Satisfaction. You had acted decisively in a fast-moving market.

But that feeling didn’t last.

Later, sometimes hours, sometimes even a day or two, you received a different notification. An email, a message in your account, or perhaps a phone call. The confirmation you received? It was wrong. The trades? They never actually went through. Or maybe you were trying desperately to enter an order or cancel a losing position, only to find the platform frozen, unresponsive, or completely crashed. By the time you could act, the market had moved dramatically against you.

If this scenario sounds painfully familiar, you are not alone.

In today’s digital age, online brokerage platforms are the primary interface between investors and the market. They promise speed, control, and convenience. And for the most part, they deliver. But what happens when these sophisticated systems, the very tools you rely on to manage your wealth, fail you at the most critical moments? What happens when glitches, crashes, or processing errors in the firm’s own technology lead directly to your financial loss?

This isn’t just a technical hiccup; it’s a breach of trust. It’s a situation where the technology provided by your brokerage firm, the technology you pay to use, becomes a direct cause of your investment losses. When this happens, you are the Character in a story where the tool designed to empower you ends up harming you. And the Problem is clear: the firm’s flawed online brokerage program failed precisely when you needed it most, in a fast-moving, high-volume market.

Your Digital Lifeline Snapped When the Market Roared

The promise of online trading is the instantaneous execution of trades. You see an opportunity, you click, and the trade happens. But this promise relies entirely on the underlying technology performing flawlessly, especially under pressure. Unfortunately, brokerage firms’ online platforms are not always built or maintained to withstand the stress of peak market activity.

Consider the scenarios we frequently encounter representing investors like you:

The Phantom Fill: Confirmed Trades That Vanish: You place an order. The system immediately confirms the trade execution – a “fill.” You will see the stock appear in your portfolio at the execution price, or the cash balance will reflect the sale. You make subsequent decisions based on this confirmation. Then, the firm notifies you that the original confirmation was erroneous and the trade never actually occurred. If the market moved against you in the interim (which it almost certainly did in a fast market), you missed your price or opportunity, and the financial consequences can be severe. Imagine confirming a sale at a peak price only to find out later it didn’t happen, and now the stock has plummeted. Or confirming a buy at a low point, only for it to be rescinded just before the stock soared. Your investment decisions, made in good faith based on the firm’s confirmation, resulted in significant losses or missed gains that were directly attributable to the system’s failure to report trade execution status in real-time accurately.
The Frozen Screen: Unable to Act When Every Second Counts: Volatility spikes. News breaks. The market reacts instantly. You need to place a critical order – perhaps to cut losses, to capture a fleeting gain, or to enter a new position. You log in, but the platform is unresponsive. Buttons don’t work. Quotes don’t update. The site times out. You try refreshing, logging back in, switching devices – nothing works. While you are locked out, the market continues to move. By the time the system finally becomes accessible again —if it does —your opportunity is gone, or your potential loss has multiplied. This isn’t just inconvenient; it’s financially paralyzing. The firm’s system failure prevented you from taking the necessary action to protect your capital or capitalize on market movements.
The Crashing Platform: System Collapse Under Volume: High-volume trading days or periods of extreme volatility place immense stress on brokerage firm infrastructure. Sometimes, the systems buckle under the load. Instead of slowing down, they crash entirely, rendering the platform inaccessible to all users. If you had open orders, positions you needed to manage, or critical actions to take, a system-wide crash during market hours can be devastating. You are left helpless on the sidelines while the market dictates your fate, a fate you could have influenced had the platform been operational.
Delayed Executions and Price Deterioration: You place a market order or a limit order at a specific price in a fast-moving market. Due to system latency or processing backlogs within the firm’s technology, your order was not executed immediately at the best available price when it was placed. Instead, it’s delayed, and by the time it is finally filled, the price has moved significantly against you. While some price fluctuation is normal in volatile markets, undue delays caused by the brokerage firm’s inadequate systems can lead to substantially worse execution prices than you should have received, directly impacting your returns.
Failure to Process Cancellations or Modifications: If you change your mind about an order or market conditions shift, and you need to cancel or modify an existing order quickly. You attempt to do so through the online platform, receiving initial confirmation that the cancellation or modification request has been received. However, due to system errors or delays, the original order may be executed before the cancellation or modification is processed, resulting in an unwanted trade or an execution at a price you were trying to avoid.

The internal problem for the investor is the profound sense of helplessness and frustration. You did everything right – you analyzed, made a decision, and took action. But forces entirely outside your control, within the brokerage firm’s own domain, thwarted your efforts and cost you money. There’s often a feeling of being betrayed by the very entity you trusted with your investments. You might wonder, “Is this my fault? Should I have known the platform wasn’t reliable?”

Philosophically, it raises a critical question: Should brokerage firms be allowed to offer online trading platforms, market them as efficient and reliable tools, and then escape responsibility when those tools fail under predictable market conditions, resulting in significant losses for their customers? We believe the answer is a resounding no. Brokerage firms have a duty to provide systems that are reasonably capable of handling expected market activity. When their systems fail and cause client losses, they must be held accountable.

Investment Fraud Attorneys – Bakhtiari & Harrison – Your Ally in Holding Firms Accountable

Navigating the aftermath of losses resulting from online brokerage platform failures can be overwhelming. Brokerage firms are powerful institutions with vast legal resources. They may try to deflect blame, citing “market conditions,” “internet issues,” or claiming their terms of service absolve them of responsibility for system malfunctions.

This is where you need a Guide – experienced legal professionals who understand the complexities of both investment technology and securities law. We are Bakhtiari & Harrison, and our mission is to stand with investors like you who have suffered losses due to the negligence or misconduct of brokerage firms.

We understand the frustration, the anger, and the financial stress that platform failures can cause. We know that seeing a confirmed trade disappear or being locked out of your account during a critical market move is not just an inconvenience; it’s a potentially devastating financial event. We have experience investigating claims involving trading errors, system failures, and negligence by brokerage firms. Our role is to help you understand what went wrong, whether the firm breached its duties to you, and how you can seek to recover your losses.

As investment fraud attorneys, a significant part of our practice involves holding financial institutions accountable for failures that harm investors. While not every platform failure constitutes “fraud” in the traditional sense, negligence in maintaining functional systems that cause losses is a serious issue that can lead to successful claims against a brokerage firm. Our team comprises seasoned FINRA attorneys well-versed in the rules and arbitration process of the Financial Industry Regulatory Authority (FINRA), the primary forum for resolving disputes between investors and brokerage firms.

We bring not only legal proficiency but also a deep understanding of the securities industry and the technological infrastructure that underpins modern trading. We know what questions to ask, what evidence to look for, and how to build a compelling case to demonstrate that the firm’s system failures were the direct cause of your losses.

Taking Action After a Platform Failure Costs You

If you’ve lost money because your online brokerage platform failed during critical market moments, you don’t have to accept it as unavoidable bad luck. There is a plan of action you can follow to recover your losses and hold the firm accountable.

Recognize the Signs and Document Everything

The first step is recognizing that your loss may not be solely due to market risk, but could also be attributed to a platform failure. Did you receive erroneous confirmations? Were you unable to access your account or place orders when you needed to? Were orders delayed, or did they fail to cancel properly?

If you suspect a system issue caused your loss, begin documenting everything immediately.

Screenshots: Take screenshots or photos of error messages, frozen screens, erroneous confirmations in your account history (before they disappear or are changed), and market prices at the time you attempted to trade versus the time your trade (or lack thereof) was processed.
Communications: Save all emails, chat logs, or written correspondence with the brokerage firm regarding the issue. Note the dates and times of phone calls, who you spoke to, and what was discussed regarding the platform problem and your trades.
Trade Records: Keep copies of all order confirmations (both the initial ones you received and any subsequent corrections), account statements, and trade journals or personal records detailing your intended actions and the actual outcome.
Notes: Write down a detailed timeline of events while it’s fresh in your memory. Note the exact times you attempted to log in, place orders, cancel orders, the specific error messages received, and the market price of the security at those times.

The more thoroughly you document the incident, the stronger your potential case will be.

Seek Seasoned Legal Counsel

This is a critical step. Cases involving complex technology failures and investment losses require specific legal knowledge. Contact an experienced investment fraud lawyer or a FINRA attorney, such as those at Bakhtiari & Harrison.

We offer a free, no-obligation consultation to review your specific situation. We will listen to your story, examine the documentation you’ve gathered, and provide an initial assessment of whether you may have a viable claim against the brokerage firm. We can help you understand the relevant securities laws and FINRA rules that apply to the firm’s obligations regarding its trading systems.

Pursue a Claim (Likely Through FINRA Arbitration)

If our assessment indicates you have a strong case, we can represent you in pursuing a claim against the brokerage firm. The vast majority of disputes between investors and brokerage firms are resolved through FINRA arbitration, a process that is often faster and less expensive than traditional court litigation.

As your FINRA attorneys, we will guide you through every step of the arbitration process:

Filing the Statement of Claim: We will draft and file a detailed Statement of Claim outlining the facts of your case, the firm’s alleged wrongdoing, and the damages you are seeking.
Discovery: We will engage in the discovery process, which involves exchanging information and documents with the brokerage firm. This is where we can seek evidence regarding the firm’s knowledge of system vulnerabilities, maintenance records, logs of system performance during the relevant period, and the firm’s internal policies and procedures regarding platform stability.
Motions and Pre-Hearing Conferences: We will handle all necessary pre-hearing motions and participate in conferences with the FINRA arbitrators.
Arbitration Hearing: We will represent you at the arbitration hearing, presenting evidence, examining witnesses (including potentially expert witnesses on trading technology), and arguing your case before a panel of FINRA arbitrators.
Settlement Negotiations: While preparing for arbitration, we will also explore opportunities to negotiate a settlement with the brokerage firm, often resolving the case without the need for a full hearing.

Our goal throughout this process is to build the strongest possible case to recover the financial losses you suffered directly as a result of the brokerage firm’s failure to provide a reliable online trading platform.

Recovering Your Losses and Holding Firms Accountable

Imagine a future where you are not left holding the bag for your brokerage firm’s technological shortcomings.

Success in pursuing a claim against a brokerage firm for platform failures can look like this:

Financial Recovery: You receive compensation for the losses you incurred due to the inability to execute or cancel trades, erroneous confirmations, or delayed executions caused by the firm’s system problems. This recovery can help you recoup your lost capital and start rebuilding your investment portfolio.
Holding the Firm Accountable: By pursuing a claim, you are sending a message that brokerage firms cannot offer sophisticated trading platforms without ensuring they are reasonably reliable, especially under predictable market stresses. Your action can contribute to firms investing more in their technology to prevent future failures, protecting other investors.
Achieving Justice and Closure: There is a sense of justice in knowing that the entity whose failing system caused your financial harm has been held responsible. Resolving the claim can provide closure, allowing you to move forward from a frustrating and costly experience.

Our role as your investment fraud attorneys and FINRA attorneys is to fight for these outcomes for you. We navigate the complex legal landscape so you can focus on moving forward.

What Happens If You Do Nothing?

Conversely, what happens if you choose not to pursue a claim after losing money due to a brokerage platform failure?

Unrecovered Losses: You will likely bear the full financial burden of the losses caused by the firm’s system problems. That money is simply gone.
No Accountability for the Firm: The brokerage firm faces no consequence for the failure of their platform that impacted you. Without being challenged, they have less incentive to improve their systems, potentially leading to similar issues for other investors.
Continued Frustration: The feeling of being wronged and helpless can linger, impacting your confidence in online trading and the financial markets.

Doing nothing guarantees that you absorb the loss and that the firm escapes accountability for the failure of the technology they provided.

Ready to Evaluate Your Case?

If you believe you have suffered investment losses due to flaws or failures in your brokerage firm’s online trading platform, you deserve to have your case reviewed by experienced legal professionals. The complexities of proving causation and navigating securities arbitration require specific expertise.

Don’t let platform failures derail your financial goals without seeking to understand your rights and options. Bakhtiari & Harrison are here to help.

Contact Bakhtiari & Harrison today for a free and confidential case evaluation.

Let us help you determine if your losses were the result of a brokerage firm’s failure to provide a reliable trading platform and explore your options for recovery. Our experienced investment fraud lawyers and FINRA attorneys are ready to listen and provide the guidance you need.

Losing money in the market is difficult enough. Losing money because the tool provided by your brokerage firm fails to meet your needs is unacceptable. Let us be your Guide in seeking the accountability and recovery you deserve.