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.

Recover Your Investment Loss with FINRA Attorneys at Bakhtiari & Harrison

At Bakhtiari & Harrison, we recognize that the financial markets can be a complex and, at times, treacherous landscape. Investors, whether novices or seasoned professionals, may find themselves facing significant financial losses due to the misconduct, fraud, or negligence of brokers or investment firms. In such situations, it is imperative to explore legal avenues to recover your investment losses and hold the responsible parties accountable.

Table of Contents

Recover Your Investment Loss By Understanding Advisor Misconduct

Investment fraud encompasses a wide range of illicit activities where individuals or entities deceive investors for financial gain. These fraudulent schemes can take various forms, each designed to exploit the trust and expectations of investors.

Common Types of Investment Fraud:

Ponzi Schemes: These involve the promise of high returns with little or no risk, where returns to earlier investors are paid using the capital from newer investors, rather than from profit earned.
Pyramid Schemes: Similar to Ponzi schemes, these require participants to recruit new members to earn profits, with the structure collapsing once recruitment slows.
Advance Fee Fraud: Scammers persuade victims to pay upfront fees to take advantage of non-existent investment opportunities.
Pump-and-Dump Schemes: Fraudsters artificially inflate the price of a stock through false or misleading statements, sell off their shares at the heightened price, and leave other investors with worthless stock.
Affinity Fraud: Scammers target members of identifiable groups, such as religious or ethnic communities, by pretending to be part of the group.
Internet and Social Media Fraud: The use of online platforms to promote fraudulent investment opportunities, often involving cryptocurrencies or other high-yield investments.

Recognizing Broker Misconduct:

Not all investment losses stem from market downturns; some are the result of broker misconduct. It’s essential to be aware of the various ways brokers can act improperly:

Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, disregarding the client’s investment objectives.
Unauthorized Trading: Executing trades without the client’s consent or prior authorization.
Unsuitable Recommendations: Advising clients to invest in products that do not align with their financial goals, risk tolerance, or investment horizon.
Misrepresentation or Omission: Providing false information or failing to disclose critical details about an investment, leading clients to make uninformed decisions.

Legal Framework for Recovery

Investors have legal recourse to recover losses resulting from fraud or broker misconduct. The Financial Industry Regulatory Authority (FINRA) provides a platform for dispute resolution between investors and brokers or brokerage firms to aid harmed investors in recovering your investment losses.

Statute of Limitations: Claims must be filed within six years of the event that caused the dispute.
Mediation: A voluntary process where a neutral third party assists in reaching a settlement. It can be initiated at any time and often leads to a quicker resolution.
Arbitration: A more formal process than mediation, where an arbitrator makes a binding decision on the case.

Steps to Recover Your Investment Losses:

Document Everything: Maintain detailed records of all communications, account statements, and transaction records.
Consult with an Attorney: Engage with legal professionals who specialize in securities law to evaluate the merits of your case.
File a Complaint: Submit a formal complaint with FINRA or the Securities and Exchange Commission (SEC) if broker misconduct is suspected.
Consider Mediation or Arbitration: Depending on the specifics of the case, pursue mediation or arbitration to seek restitution.

While it’s crucial to know how to recover your investment losses, prevention is always better than cure. Investors should:

Conduct Due Diligence: Research investment opportunities thoroughly and verify the credentials of brokers and investment advisors.
Be Skeptical of High Returns: Approach promises of high returns with little or no risk with caution, as they are often indicative of fraudulent schemes.
Stay Informed: Keep abreast of common investment scams and regulatory updates to make informed decisions.

Why Bakhtiari & Harrison?

When it comes to navigating the complex waters of investment fraud, you need a legal team that not only understands the intricacies of securities law but also prioritizes your financial well-being. Bakhtiari & Harrison securities attorneys stand out as a premier choice for several compelling reasons.

Bakhtiari & Harrison’s are well-versed in the nuances of investment fraud. They bring years of experience to the table, ensuring that every aspect of your case is meticulously examined. This expertise is crucial in identifying the subtle signs of fraud that less experienced lawyers might overlook.

Every investment fraud case is unique, Bakhtiari & Harrison understand this better than anyone. They don’t believe in a one-size-fits-all approach to recover your investment loss. Instead, they develop tailored strategies that align with your specific circumstances and goals to recover your investment losses. This personalized approach not only increases the chances of a favorable outcome but also ensures that you are fully informed and involved in every step of the legal process.

The firm is committed to providing exceptional service to recover your investment losses, which includes clear communication, transparency, and unwavering support. From the initial consultation to the resolution of your case, you can expect a partnership built on trust and mutual respect. Bakhtiari & Harrison represent investors seeking to recover your investment loss.

Choosing the right legal representation can make all the difference in the outcome of your investment fraud case. At Bakhtiari & Harrison, we are committed to assisting investors in navigating FINRA arbitration and litigation to recover your investment losses. Our experienced attorneys are dedicated to holding fraudulent parties accountable and ensuring that our clients receive the justice and compensation they deserve. If you have suffered financial losses due to investment fraud or broker misconduct, we encourage you to contact us for a comprehensive evaluation of your case. Take the first step to recover your investment losses.