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.

Understanding California Securities Laws

Navigating the intricate landscape of securities transactions in California can be daunting. At Bakhtiari & Harrison, we focus on providing clear guidance and professional legal representation to help our clients understand and comply with these regulations. Whether you’re in Los Angeles, San Francisco, San Diego, or Sacramento, understanding the key components of California securities laws is crucial for protecting your interests and ensuring regulatory compliance.

Department of Financial Protection and Innovation (DFPI)

The Department of Financial Protection and Innovation (DFPI), formerly known as the Department of Business Oversight, regulates all offers and sales of securities in California. The DFPI oversees the licensing and supervision of various financial entities, including securities brokers and investment advisors. They ensure that these entities comply with state law and regulations designed to protect investors and maintain market integrity.

The DFPI plays a critical role in maintaining the stability and transparency of California’s financial markets. Their duties include the oversight of securities transactions, ensuring that issuances of securities are conducted in accordance with state laws, and that all securities offered or sold within the state are properly registered unless exempted. This department also has the authority to investigate and take action against entities or individuals who violate securities laws, providing a vital layer of protection for investors.

In cities like Los Angeles and San Francisco, where financial activities are bustling, the DFPI’s role is particularly significant. They help maintain the integrity of the financial markets by ensuring compliance with regulations and by acting swiftly against any fraudulent activities. This oversight is crucial in cities with large financial sectors to maintain investor confidence and market stability.

State of California Department of Justice: Office of the Attorney General

The California Attorney General’s Office is another key player in enforcing state securities laws. The Attorney General’s office investigates and prosecutes violations of securities laws, aiming to prevent fraud and protect investors from unethical practices. Their role includes the enforcement of the California Corporate Securities Law and other state securities laws to ensure that the financial markets operate fairly and transparently.

The Attorney General’s office is essential in pursuing cases of securities fraud, which can have devastating effects on investors and the broader economy. By taking legal action against those who violate securities laws, the Attorney General helps deter fraudulent activities and protect the integrity of the securities market.

In major cities like San Diego and Sacramento, the Attorney General’s office works to protect local investors from fraudulent schemes and to uphold the law. Their efforts are crucial in maintaining public trust in the financial system, which is vital for the health of the state’s economy.

California Corporate Securities Law

The California Corporate Securities Law is a foundational piece of legislation that governs the issuance and sales of securities in California. This law includes provisions such as California Corporations Code Section 25400, which addresses fraudulent and manipulative practices in the offer, sale, and purchase of securities. Additionally, Section 25102 details exemptions from qualification for certain securities transactions.

California Corporate Securities Law is comprehensive, covering various aspects of securities transactions to ensure that they are conducted fairly and transparently. This law is designed to prevent fraud and protect investors by imposing strict regulations on the issuance and sale of securities.

In bustling financial hubs like Los Angeles and San Francisco, adherence to these laws is critical for maintaining market integrity. The provisions in Section 25400, for example, prohibit activities such as market manipulation and the dissemination of false information, which can severely undermine investor confidence and market stability.

Federal Securities Laws: SEC and FINRA

The Securities and Exchange Commission (SEC) enforces federal securities laws and regulates securities markets. The Securities Act of 1933 is a key piece of legislation that regulates the issuance of securities to the public. The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization that oversees securities transactions and enforces rules that protect investors. Compliance with both SEC and FINRA regulations is essential for anyone involved in the securities market.

The SEC is responsible for enforcing federal securities laws, which include the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws are designed to ensure that investors have access to important information about securities being offered or sold, and to prevent fraud in the securities markets.

FINRA, on the other hand, oversees the activities of broker-dealers and ensures that they adhere to ethical standards and regulatory requirements. By monitoring securities transactions and conducting examinations, FINRA helps maintain the integrity of the financial markets and protect investors from fraud and unethical practices.

In California’s major financial centers, such as San Diego and Sacramento, compliance with SEC and FINRA regulations is crucial for maintaining investor confidence and ensuring that the markets operate smoothly and fairly.

Investment Company Act of 1940

The Investment Company Act of 1940 governs the organization and activities of investment companies, including mutual funds. It aims to protect the interests of investors by regulating conflicts of interest, disclosure, and other critical aspects of investment company operations.

The Investment Company Act of 1940 imposes strict regulations on investment companies to ensure that they operate transparently and in the best interests of their investors. This includes requirements for disclosure of important information, regulations on conflicts of interest, and standards for the management and operations of investment companies.

In cities like Los Angeles and San Francisco, where many investment companies are headquartered, compliance with the Investment Company Act is essential for maintaining investor confidence and ensuring the smooth operation of the financial markets.

Securities Law of 1968

The Securities Law of 1968 established a framework for regulating securities offered or sold in California. This law is a crucial element of state securities laws and includes various provisions to prevent securities fraud and protect investors from false information.

The Securities Law of 1968 provides a comprehensive framework for the regulation of securities transactions in California. It aims to protect investors by ensuring that securities offered or sold within the state are properly registered and that issuers provide accurate and complete information about their securities.

In major financial centers like San Diego and Sacramento, adherence to the Securities Law of 1968 is essential for maintaining market integrity and protecting investors from fraud and misrepresentation.

Bakhtiari & Harrison: Your Trusted Authorities

At Bakhtiari & Harrison, we have extensive experience in navigating California’s complex securities laws. Our team of legal professionals is dedicated to providing top-tier legal services to our clients, ensuring they understand their obligations and rights under the law. We assist in a wide range of areas, including:

Compliance and Regulatory Guidance

We help clients comply with DFPI, SEC, and FINRA regulations. Our expertise ensures that financial entities adhere to all applicable rules and standards, minimizing the risk of regulatory action and maintaining investor confidence.

Fraud and Misrepresentation

We represent clients in cases involving securities fraud and misrepresentation under California Corporations Code Section 25400. Our legal team has the knowledge and experience to effectively advocate for clients who have been victims of fraudulent practices.

Litigation and Arbitration

We provide top-notch representation in securities litigation and FINRA arbitration. Our attorneys have a proven track record of successfully resolving disputes and securing favorable outcomes for our clients.

Investment Company Act Compliance

We advise investment companies on compliance with the Investment Company Act of 1940. Our services ensure that investment companies operate in accordance with regulatory requirements, protecting the interests of their investors.

Issuance and Sales of Securities

We guide clients through the process of issuing securities and ensuring compliance with state and federal laws. Our proficiency in securities law helps clients navigate the complexities of securities transactions and avoid potential legal pitfalls.

For personalized legal assistance and to ensure you’re fully compliant with all applicable securities laws, contact Bakhtiari & Harrison at (310) 499-4732 or visit our website.

Navigating securities laws can be complex, but with Bakhtiari & Harrison by your side, you can move forward with confidence. Reach out to us today for authoritative legal support tailored to your needs.