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 Can You Do if You Are a Victim of Investment Fraud?

Investment fraud and securities scams can have devastating consequences, leaving victims of investment fraud feeling powerless and unsure of how to recover their losses. Whether you’ve been targeted by a Ponzi scheme, misled by a fraudulent investment opportunity, or victimized by broker misconduct, taking decisive action is essential to protect your financial future. Here’s a step-by-step guide on what to do if you are a victim of investment fraud.

Victim of Investment Fraud? Recognize the Signs

The first step is understanding whether you’ve been a victim of fraud. Common warning signs include:

Unusual Losses or Discrepancies: Unexpected losses or discrepancies in your investment accounts that cannot be explained by market performance.
Pressure to Invest: High-pressure tactics encouraging you to act quickly or invest without fully understanding the opportunity.
Unrealistic Promises: Guaranteed high returns with little or no risk—something that is rarely legitimate.
Missing Documentation: Lack of proper documentation or difficulty obtaining information about your investments.
Unauthorized Transactions: Trades or movements in your account that you did not approve.

If you notice any of these red flags, take immediate action.

Stop Further Transactions

If you suspect fraud, cease all transactions with the involved party immediately. This may include:

Cutting Off Communication: Avoid further conversations with the person or entity that defrauded you, as they may attempt to manipulate or threaten you.
Blocking Access to Funds: Contact your financial institution to block further withdrawals or transfers from your accounts.

Taking quick action can help limit additional losses.

Gather Evidence

Document everything related to the fraudulent investment. This includes:

Investment Agreements and Prospectuses: Copies of all paperwork related to the investment.
Transaction Records: Bank statements, wire transfers, and account records showing money movements.
Communications: Emails, text messages, or phone call logs with the individual or company involved.
Marketing Materials: Any brochures, presentations, or advertisements used to promote the investment.

Having detailed records will strengthen your case when pursuing legal action or filing a complaint.

Report the Fraud

A victim of investment fraud should consider reporting it to the appropriate authorities to hold the perpetrators accountable and prevent further harm to others. Key organizations to contact include:

The Securities and Exchange Commission (SEC): File a complaint through the SEC’s online portal if the fraud involves securities such as stocks, bonds, or mutual funds.
Financial Industry Regulatory Authority (FINRA): Report broker misconduct or disputes involving brokerage firms.
State Securities Regulators: Many states have agencies dedicated to investigating investment fraud.
Local Law Enforcement: For criminal fraud cases, file a police report to initiate a formal investigation.

Reporting the fraud not only helps authorities but may also create a record that strengthens your claim for compensation.

Consult an Experienced Investment Fraud Attorney

Recovering losses from investment fraud often requires legal expertise. Investment fraud cases can be complex, involving intricate financial transactions and multiple parties. An attorney focusing on securities law can:

Evaluate Your Case: Determine if you are a victim of investment fraud and the viability of your claim and identify responsible parties.
Guide You Through the Process: Explain your rights, legal options, and the steps involved in pursuing recovery.
Represent You in Legal Proceedings: Whether through negotiation, arbitration, or litigation, a skilled attorney can fight for your interests and seek maximum compensation.

Attorneys like those at Bakhtiari & Harrison in Los Angeles have extensive experience in helping a victim of investment fraud rebuild their financial lives.

Explore Recovery Options

There are several avenues for recovering your losses:

Arbitration: If the fraud involves a broker or financial advisor, arbitration through organizations like FINRA may be an option. Arbitration is often faster and less expensive than court litigation.
Civil Lawsuits: You can file a lawsuit against the fraudulent party to seek damages for your losses.
Restitution Funds: In some cases, regulatory agencies like the SEC or state regulators may establish restitution funds for victims of large-scale fraud schemes.
Insurance Claims: If the fraud involves a licensed financial professional, their firm’s errors and omissions insurance may cover your losses.

An investment fraud attorney will help you determine the best approach based on your circumstances.

Protect Yourself Moving Forward

After addressing the immediate fallout of being a victim of investment fraud, take steps to prevent future issues:

Conduct Due Diligence: Research any investment opportunity thoroughly, verifying credentials and checking for past complaints.
Stay Skeptical of High Returns: Be wary of promises that sound too good to be true.
Monitor Your Accounts Regularly: Review account statements and activity to catch unauthorized transactions early.
Educate Yourself: Learn about common scams and tactics used by fraudsters to better recognize and avoid them.

If You’ve Fallen Victim to Investment Fraud Why Choose Bakhtiari & Harrison?

If you’ve fallen victim to investment fraud, having skilled legal representation is crucial to achieving a successful recovery. At Bakhtiari & Harrison, their team of experienced securities attorneys is dedicated to helping a victim of investment fraud navigate the complexities of a securities case, hold wrongdoers accountable, and secure financial compensation. With a proven track record of success and a client-first approach, they offer the expertise and support you need during this challenging time. If you’ve been a victim of investment fraud, don’t let it define your financial future. Contact Bakhtiari & Harrison today for a consultation. Their experienced attorneys will guide you through the recovery process and fight to protect your rights.