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.

Pasadena FINRA Securities Attorneys: Representing Harmed Investors

Pasadena FINRA securities attorneys at Bakhtiari & Harrison understand the profound impact financial losses can have on investors, especially when those losses result from the misconduct or negligence of brokerage firms. Our dedicated team of FINRA securities attorneys is committed to helping investors in Pasadena and its suburbs, including South Pasadena, Altadena, San Marino, and La Cañada Flintridge, navigate the complex landscape of financial disputes and recover their rightful investments. In this comprehensive blog, we delve into the various claims we handle and provide an in-depth look at the FINRA arbitration process.

Understanding Investor Claims Against Brokerage Firms

Investors place their trust in brokerage firms and financial advisors to manage their investments prudently. Unfortunately, this trust can sometimes be betrayed, leading to significant financial harm. Pasadena FINRA securities attorneys at Bakhtiari & Harrison represent investors in a variety of claims against brokerage firms, including:

Misrepresentation and Omission of Material Facts:
- Misrepresentation occurs when a broker provides false information about an investment.
- Omission involves withholding critical information that could influence an investor’s decision.
- These deceptive practices can lead investors to make uninformed and detrimental decisions.
Unsuitable Recommendations:
- Brokers are obligated to recommend investments that align with an investor’s financial goals, risk tolerance, and investment experience.
- Unsuitable recommendations can result in significant losses, especially for conservative investors who are misled into high-risk ventures.
Churning:
- This unethical practice involves excessive trading to generate higher commissions for the broker, regardless of the investor’s best interests.
- Churning often leads to inflated fees and unnecessary risks, eroding the value of an investor’s portfolio.
Unauthorized Trading:
- Brokers must obtain explicit consent from investors before executing trades.
- Unauthorized trading violates this principle and can significantly impact an investor’s financial strategy.
Overconcentration:
- Diversification is key to managing investment risk.
- Overconcentration occurs when a broker places a large portion of an investor’s portfolio into a single investment or sector, increasing vulnerability to market fluctuations.
Failure to Supervise:
- Brokerage firms have a duty to oversee their brokers’ activities to prevent misconduct.
- Failure to supervise claims arise when a firm neglects this responsibility, resulting in investor harm.
Ponzi Schemes and Fraudulent Investments:
- Some brokers engage in outright fraud, luring investors into schemes designed to collapse.
- Ponzi schemes promise high returns with little risk, paying earlier investors with funds from newer ones, eventually leading to catastrophic losses.

The FINRA Arbitration Process

When disputes arise, investors often turn to the Financial Industry Regulatory Authority (FINRA) arbitration process. This streamlined and efficient method provides a resolution without the need for protracted litigation. Pasadena FINRA securities attorneys at Bakhtiari & Harrison provide thier step-by-step guide to understanding the FINRA arbitration process:

Filing a Claim:
- The process begins with the investor (claimant) filing a Statement of Claim with FINRA, detailing the dispute, parties involved, and the relief sought.
- Bakhtiari & Harrison meticulously prepare these claims, ensuring all pertinent information and evidence are presented clearly.
Response:
- The brokerage firm (respondent) is required to file an Answer within 45 days, addressing the allegations and presenting any defenses.
- This stage often involves substantial back-and-forth, and our attorneys are adept at countering defenses and reinforcing our clients’ claims.
Selection of Arbitrators:
- Both parties select arbitrators from a FINRA-approved pool. The panel typically includes individuals with relevant expertise and experience.
- The selection process is crucial, and our firm ensures that the chosen arbitrators are impartial and well-suited to handle the complexities of the case.
Prehearing Conferences:
- These meetings, conducted via phone or video conference, allow both parties to discuss procedural matters, schedule hearings, and address preliminary issues.
- Effective negotiation during prehearing conferences can streamline the process and resolve some disputes without a full hearing.
Discovery:
- The discovery phase involves exchanging documents, information, and witness lists.
- Pasadena FINRA securities attorneys at Bakhtiari & Harrison handle discovery diligently, ensuring that all relevant evidence is obtained and disclosed, which is critical for building a robust case.
Hearings:
- The arbitration hearing resembles a trial, where both parties present their evidence, call witnesses, and make arguments before the arbitration panel.
- Bakhtiari & Harrison’s attorneys excel in presenting compelling cases, cross-examining witnesses, and delivering persuasive arguments.
Award:
- After the hearing, the arbitrators deliberate and issue an Award, which is binding and enforceable in court.
- Pasadena FINRA securities attorneys at Bakhtiari & Harrison ensures that the award is comprehensive and fair, reflecting the extent of the investor’s losses and holding the brokerage firm accountable.

Pasadena FINRA Securities Attorneys Seeking Client Centered Results

Senior citizens are particularly vulnerable to investment fraud and misconduct. Many states, including California, have enacted elder abuse statutes to protect seniors from financial exploitation. These laws pro

vide for attorney’s fees, costs, and treble damages, significantly enhancing the remedies available to defrauded senior investors.

Pasadena FINRA securities attorneys at Bakhtiari & Harrison are passionate about safeguarding the interests of elderly investors. Our attorneys work tirelessly to ensure that senior citizens receive the justice and compensation they deserve. Whether through FINRA arbitration or litigation, we leverage every legal avenue to hold wrongdoers accountable.

Pasadena FINRA securities attorneys at Bakhtiari & Harrison represent clients in the local community, including the surrounding suburbs of South Pasadena, Altadena, San Marino, and La Cañada Flintridge. We understand the unique challenges faced by investors in these areas and are committed to providing exceptional legal representation. Our firm actively engages in community outreach, educating investors about their rights and how to protect themselves from fraud and misconduct.

We also maintain strong relationships with local CPAs, financial advisors, and other professionals, fostering a collaborative approach to resolving financial disputes. By working together, we aim to create a safer investment environment.

In addition to representing clients in California, Pasadena FINRA securities attorneys at Bakhtiari & Harrison are dedicated to educating the public about investment fraud and investor rights. We represent victims of financial and investment fraud throughout California, including Beverly Hills, Hidden Hills, Los Angeles, Orange County, Pacific Palisades, Palm Springs, Pasadena, San Diego, San Francisco, and other locations. Pasadena FINRA securities attorneys at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses.