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.

Securities Litigation: Protecting Your Investments When Brokers Fail

Are you struggling with financial losses in the stock market due to the actions of your stockbroker or brokerage firm? You are not alone. Many investors face similar challenges, often feeling overwhelmed by larger financial institutions. Fortunately, securities litigation offers a powerful means of recourse. This legal action can be your optimal strategy for recovering financial losses caused by broker misconduct. At Bakhtiari & Harrison, we dedicate ourselves to supporting investors through these complex scenarios. Contact us today if you believe you are a victim of securities misconduct.

Understanding Securities Litigation

Securities litigation involves legal action initiated by investors against brokers, advisors, or brokerage firms responsible for investor losses. This process addresses wrongful activities such as fraud, misrepresentation, unsuitable investment advice, and failure to disclose important information. It is a crucial legal framework designed to protect investors and ensure accountability for financial mismanagement.

The Importance of Securities Litigation

Investing in the stock market involves inherent risks, but investors should not have to tolerate losses due to unethical behavior from financial professionals. Securities litigation is vital for maintaining market integrity, enforcing accountability, and compensating investors for losses. It fortifies the trust that underpins the financial markets, deterring exploitation and promoting transparency.

Frequently Asked Questions About Securities Litigation

What exactly is securities litigation? Securities litigation is the process through which investors can initiate legal proceedings against financial brokers, advisors, or firms that have caused them financial harm through unethical practices.

Why is litigation important for investors? Securities litigation is crucial because it provides a legal pathway for investors to recover losses and helps ensure that financial markets operate with transparency and fairness.

Can any investor file a securities claim? Any investor who has suffered losses due to the misconduct of their financial advisor or broker can potentially file a securities litigation claim, provided they can substantiate the misconduct.

What are common types of broker misconduct that lead to litigation? Common types include fraud, unauthorized trading, misrepresenting investment products, and providing unsuitable investment advice.

What should I do first if I suspect broker misconduct? The first step is to gather all related financial documents and communications, then consult with a qualified securities litigation attorney to discuss your case.

How long does a securities claim typically take? The duration can vary greatly depending on the case’s complexity, but it generally takes several months to a few years to resolve.

What can I potentially recover? Investors can recover financial losses attributed to broker misconduct and, in some cases, costs, legal fees, and punitive damages.

Are there alternatives to litigation when dealing with broker disputes? Yes, alternatives include arbitration or mediation, which can be faster and less costly, though they might result in lower recovery amounts.

How does one choose the right attorney for securities litigation? Look for an attorney with extensive experience in securities litigation, a track record of successful cases, and someone who understands the intricacies of financial regulations.

What is the cost of pursuing securities litigation? Costs can vary, but many securities litigation attorneys work on a contingency fee basis, meaning they only get paid if you recover funds from your case.

Real Examples of Securities Litigation Success

Examples of securities litigation often highlight substantial recoveries for investors:

Case of Excessive Risk Exposure: Investors in a technology fund recovered millions after proving that their advisor had placed them in precarious positions without their knowledge.
Failure to Disclose Risks: A retiree was compensated after her broker failed to disclose the high risks associated with an aggressive investment strategy, resulting in significant losses.

Why Bakhtiari & Harrison?

Securities claims can be complex and daunting, involving stages such as filing a complaint, discovery, and potentially a trial. Each phase requires meticulous preparation and a clear understanding of legal strategies. An experienced securities litigation attorney can provide crucial guidance and support through each step, simplifying the process and boosting your chances of a favorable outcome. We also pursue claims in FINRA arbitration.

Litigation is more than just a means to recover financial losses; it is about asserting your rights as an investor and reinforcing the ethical standards expected in the financial markets. If you believe you have been a victim of broker misconduct, taking legal action can prevent similar incidents in the future and protect other investors.

Ready to stand up against broker misconduct? Contact Bakhtiari & Harrison now for a free consultation. Our experienced team will help you understand your rights and begin the process of recovering your losses. Act today to protect your investments and pursue justice.