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.

What Is a Securities and Commodities Fraud Lawyer?

Securities and Commodities Fraud Lawyers at Bakhtiari & Harrison

Securities fraud refers to deceptive practices in the stock or bond markets. This includes insider trading, false financial reporting, Ponzi schemes, or manipulation of stock prices. Commodities fraud, on the other hand, involves illegal activities in markets trading goods like oil, gold, or agricultural products. Common forms of commodities fraud include misrepresentation of investment opportunities, unauthorized trading, or fraudulent commodity pool operations.

Both types of fraud harm market integrity and cause significant financial losses to investors. Lawyers specializing in these areas are essential for holding wrongdoers accountable and protecting clients from financial ruin.

Roles and Responsibilities

A securities and commodities fraud lawyer has a diverse set of responsibilities. They may represent individuals or groups in a wide range of cases, including:

Investor Representation: Attorneys help investors who have lost money due to fraud by pursuing claims against brokers, financial advisors, or firms. This could involve filing lawsuits or initiating arbitration proceedings.
Defense for Accused Parties: Lawyers also defend brokers, advisors, or firms accused of fraudulent activities, ensuring they receive a fair trial and that their rights are protected.
Regulatory Compliance: Securities and commodities fraud lawyers assist clients in adhering to regulations set by the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and other regulatory bodies. They help prevent legal issues by advising on compliance and best practices.
Investigations and Due Diligence: These attorneys often investigate transactions or conduct due diligence for clients to ensure investments are legitimate and free from fraudulent practices.
Arbitration and Mediation: Many cases involving securities and commodities fraud are resolved through arbitration or mediation rather than court trials. Lawyers representing clients in these proceedings aim to secure fair compensation or settlements.

Skills and Expertise

Securities and commodities fraud lawyers require deep knowledge of financial markets, investment products, and regulations. They must be familiar with laws like the Securities Act of 1933, the Securities Exchange Act of 1934, and the Commodity Exchange Act. Their expertise extends to understanding how financial instruments like stocks, bonds, and derivatives operate.

Effective fraud lawyers also need strong analytical skills to evaluate complex financial transactions and uncover evidence of wrongdoing. Negotiation and litigation skills are crucial for resolving disputes, whether through settlements, arbitration, or court trials.

Common Scenarios Where They Help

A securities and commodities fraud lawyer may assist clients in situations such as:

Ponzi and Pyramid Schemes: Victims of Ponzi schemes, where returns to earlier investors are paid using funds from new investors, often turn to these lawyers to recover losses.
Insider Trading Allegations: If someone is accused of trading on confidential, non-public information, a securities fraud attorney can defend them against these claims.
Broker Misconduct: Investors who believe their brokers engaged in unauthorized trading, unsuitable recommendations, or excessive trading may seek legal action with the help of an attorney.
Market Manipulation: Cases involving deliberate manipulation of stock or commodity prices fall under their purview.
False Financial Statements: Lawyers handle cases where companies issue misleading financial information to inflate stock prices or attract investors.

The Legal Process

When a securities and commodities fraud lawyer takes on a case, the process typically involves the following steps:

Case Evaluation: The lawyer assesses the client’s situation, including reviewing documentation, investment records, and communications, to determine if fraud occurred.
Investigation: They may collaborate with forensic accountants or financial experts to uncover evidence of deceptive practices.
Filing a Claim: If fraud is evident, the lawyer will file a lawsuit, arbitration, or mediation claim, depending on the circumstances and agreements in place.
Negotiation or Litigation: The lawyer negotiates settlements or represents the client in arbitration or court to resolve the dispute.
Recovery of Losses: The ultimate goal is to recover the client’s financial losses or mitigate legal consequences for accused parties.

Why Their Role Matters

Fraud in financial markets can have devastating consequences, eroding investor trust and damaging the economy. Securities and commodities fraud lawyers play a critical role in upholding the law, ensuring accountability, and protecting individuals from financial harm. They are often the last line of defense for victims of fraud, helping them recover their losses and rebuild their financial stability.

At the same time, these lawyers help preserve market integrity by defending against unjust accusations and ensuring compliance with regulations. Their work deters fraudulent activities, creating a safer environment for investors and businesses alike.

Protect Your Financial Future with Securities and Commodities Fraud Lawyers at Bakhtiari & Harrison

Securities and commodities fraud lawyers are essential players in the financial and legal ecosystems. Their expertise in financial regulations, legal strategies, and dispute resolution equips them to address complex fraud cases effectively. Whether representing victims or accused parties, these attorneys provide critical guidance and advocacy to ensure justice and financial accountability in the volatile world of investments. For anyone navigating the challenges of securities or commodities fraud, these legal professionals are indispensable allies. Contact Bakhtiari & Harrison.