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.

Protecting Your Finances: Investment Fraud Lawyers

Investment fraud can have devastating effects on your financial well-being. It’s essential to understand how to protect yourself and seek the proper legal representation if you find yourself a victim. This article will guide you through the role of investment fraud lawyers, how they can help you, and what to look for in the best investment fraud lawyers near you.

Understanding Investment Fraud

Investment fraud occurs when someone deceives you into making poor investment decisions, often resulting in significant financial loss. Common types of investment fraud include Ponzi schemes, pyramid schemes, and pump-and-dump scams. Recognizing these fraudulent activities early can save you from severe economic harm.

Investment fraud can take many forms and can be perpetrated by individuals, companies, or organized crime groups. The deceptive tactics can range from falsified financial statements to misleading marketing materials. Being aware of the various methods employed by fraudsters can help you stay vigilant and protect your investments.

Types of Investment Fraud

Ponzi Schemes: These involve paying returns to earlier investors with capital from new investors rather than profit earned. As more investors join, the scheme requires increasing new capital to sustain payouts, eventually collapsing when new investments dry up.

Pyramid Schemes: Similar to Ponzi schemes but typically require participants to recruit new investors to earn returns. The structure is unsustainable because it relies on a constant influx of new recruits, which eventually becomes impossible to maintain.

Pump-and-Dump Scams: Fraudsters artificially inflate the price of a stock they own through false or misleading statements, then sell off their shares at the heightened price. The stock price plummets once they sell their shares, leaving other investors with significant losses.

Understanding these types of fraud can help you identify red flags and avoid falling prey to these schemes. Educating yourself and staying informed about common fraud tactics is critical in safeguarding your financial future.

The Role of Investment Fraud Lawyers

Investment fraud lawyers focus on cases where investors have been deceived or defrauded. These legal professionals can help you navigate the complexities of securities laws and regulations, ensuring you can recover your losses.

Investment fraud lawyers are not just attorneys who understand financial fraud; they are knowledgeable regarding investment scams. These attorneys are also skilled negotiators and advocates. They can guide you through the intricacies of the legal system, help you understand your rights, and work tirelessly to hold fraudsters accountable. Their experience is invaluable in criminal and civil cases, providing a comprehensive approach to tackling investment fraud.

Legal Representation

When facing investment fraud, having suitable legal representation is crucial. Investment fraud lawyers can provide correct advice, represent you in court, and negotiate settlements on your behalf. They have a deep understanding of the Securities and Exchange Commission (SEC) regulations and the Financial Industry Regulatory Authority (FINRA) arbitration process.

Effective legal representation also involves thorough case preparation and strategic planning. Your lawyer will gather evidence, interview witnesses, and build a compelling case to present in court or during arbitration. They will also keep you informed throughout the process, ensuring you understand each step and its implications.

How Investment Fraud Lawyers Help

Case Evaluation: Assess the details of your case to determine if you have been a victim of investment fraud. This involves reviewing your investment history, communications with the alleged fraudster, and any financial statements or documents you have.

Legal Advice: Provide guidance on the best course of action for your situation. This may include filing a lawsuit, seeking arbitration, or negotiating a settlement.

Representation: Represent you in court or arbitration to recover lost funds. Your lawyer will present evidence, cross-examine witnesses, and make legal arguments on your behalf.

Settlement Negotiation: Negotiate settlements with the fraudsters or their representatives to potentially recover your investments without going to trial. This can be a quicker and less stressful way to resolve your case.

By offering these services, investment fraud lawyers aim to maximize your chances of recovering your losses and achieving a favorable outcome. They are committed to protecting your interests and ensuring that justice is served.

Finding the Best Investment Fraud Lawyers Near You

When searching for investment fraud lawyers near you, consider the following factors to ensure you choose the right one for your case:

Experience

Look for lawyers with a proven track record of success in investment fraud cases. Their understanding of securities fraud and financial regulations will be invaluable in building a strong case. Experienced lawyers will also be familiar with fraudsters’ tactics and how to counter them effectively.

Client Testimonials

Check for client testimonials and reviews to get an idea of their reputation and the quality of their services. Positive feedback from previous clients can be a good indicator of their competence and reliability. Look for testimonials that mention successful case outcomes, effective communication, and a professional demeanor.

You can also ask the lawyer for references from past clients. Speaking directly with someone who has worked with the lawyer can provide valuable insights into what you can expect from their services.

Consultation Services

Many investment fraud lawyers offer free initial consultations. Take advantage of these consultations to discuss your case and gauge their suitability. This is also an opportunity to ask questions about their experience, fees, and approach to handling investment fraud cases.

During the consultation, pay attention to how the lawyer communicates and whether they make you feel comfortable and confident in their abilities. A good lawyer should be able to explain complex legal concepts in a way that you can understand and provide a clear plan for how they will handle your case.

Legal Fees

Understand the fee structure before hiring a lawyer. Some may work on a contingency basis, meaning they only get paid if you win your case. Others might charge hourly rates or flat fees. Ensure that you are comfortable with their payment terms and that there are no hidden costs.

It’s also important to discuss any potential additional expenses, such as court fees, expert witness fees, or costs associated with gathering evidence. A transparent discussion about fees will help you avoid surprises and ensure you can afford the legal services you need.

The Importance of SEC and FINRA in Investment Fraud Cases

The SEC and FINRA are crucial in regulating and overseeing the securities industry. Understanding their functions can help you better navigate your investment fraud case.

The SEC (Securities and Exchange Commission)

The SEC is a federal agency responsible for enforcing securities laws and protecting investors. They investigate and take action against fraudulent activities in the securities markets. Investment fraud lawyers often work closely with the SEC to build cases and recover client losses.

The SEC also provides resources and information to help investors recognize and avoid fraud. Familiarizing yourself with these resources can enhance your ability to detect suspicious activities and take preventive measures.

FINRA (Financial Industry Regulatory Authority)

FINRA is a self-regulatory organization that oversees brokerage firms and their registered representatives. They handle arbitration and mediation processes for disputes between investors and brokers. Investment fraud lawyers can represent you in FINRA arbitration to resolve your case and potentially recover your losses.

FINRA’s arbitration process is an alternative to traditional litigation. It can be a faster and less formal way to resolve disputes. Understanding how this process works and what to expect can help you feel more prepared and confident as you pursue your case.

Steps to Take if You Suspect Investment Fraud

If you suspect you have been a victim of investment fraud, acting quickly is essential. Here are the steps you should take:

Gather Evidence: Collect all relevant documents, emails, and communications related to the investment. Detailed records will prove your case and demonstrate the fraudster’s actions.

Report the Fraud: Contact the SEC and FINRA to report the suspected fraud. They can initiate investigations and take action against the fraudsters. Reporting fraud also helps protect other potential victims.

Seek Legal Advice: Consult an investment fraud lawyer to discuss your case and determine the best action. A lawyer can provide valuable guidance and help you understand your options for recovering your losses.

Avoid Further Losses: Cease further transactions with the suspected fraudster and safeguard your remaining assets. Taking prompt action can prevent additional financial harm and help you focus on recovering your lost investments.

Taking these steps promptly can improve your chances of a successful outcome and help you minimize the impact of the fraud on your financial situation.

Conclusion

Investment fraud can be financially and emotionally devastating. However, with the right legal representation, you can take steps to recover your losses and hold the fraudsters accountable. Investment fraud lawyers have the knowledge and experience to guide you through the complex legal landscape and help you protect your finances.

By understanding the role of the SEC and FINRA, recognizing the signs of investment fraud, and knowing what to look for in an investment fraud lawyer, you can better protect yourself and seek justice if you fall victim to financial scams.

If you suspect that you have been a victim of investment fraud, don’t hesitate to seek legal advice. Reach out to investment fraud lawyers near you for a consultation and take the first step towards recovering your financial losses.

Taking proactive steps to educate yourself and secure professional help can make a significant difference in your ability to recover from investment fraud. Remember, you don’t have to navigate this challenging situation alone—qualified investment fraud lawyers are available to support you every step of the way.

For more information or to schedule a consultation, visit Bakhtiari & Harrison or call us at (310) 499-4732. We are here to help you protect your financial future.