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 FINRA BrokerCheck?

For investors and financial professionals alike, transparency and trust are essential in the financial services industry. The Financial Industry Regulatory Authority (FINRA) provides a vital tool called FINRA BrokerCheck, designed to offer insights into the backgrounds of brokers, investment advisers, and brokerage firms. Understanding how FINRA BrokerCheck works and how to use it effectively can help individuals make informed decisions when selecting a financial professional.

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Understanding FINRA BrokerCheck

FINRA BrokerCheck is an online tool that allows investors and the public to research the professional background, qualifications, and disciplinary history of registered brokers, brokerage firms, and investment adviser representatives. It serves as a key resource for ensuring that financial professionals adhere to regulatory standards and maintain credibility within the industry.

BrokerCheck provides access to records from FINRA, the Securities and Exchange Commission (SEC), and state securities regulators. By entering a broker’s or firm’s name, users can access details about:

Registration history – A broker’s or firm’s current and past registrations with FINRA and other regulatory agencies.
Employment history – Previous firms where a broker has worked and the timeline of their employment.
Examinations and qualifications – Licenses, certifications, and regulatory exams passed by a broker.
Disciplinary actions and complaints – Any regulatory sanctions, customer disputes, terminations, or legal matters involving a broker or firm.
Broker or firm disclosures – Information about bankruptcies, criminal records, and civil litigation that may impact an individual’s ability to serve as a financial professional.

Why Was FINRA BrokerCheck Created?

BrokerCheck was established to promote transparency and investor protection by allowing individuals to verify the credentials and track record of financial professionals before making investment decisions. Given the complexity of financial markets and the potential for fraud, the tool helps investors identify brokers who have been subject to disciplinary actions, complaints, or unethical behavior.

By providing access to regulatory and legal history, BrokerCheck helps mitigate the risks associated with entrusting financial assets to professionals with questionable backgrounds.

Who Benefits from FINRA BrokerCheck?

BrokerCheck serves multiple stakeholders within the financial industry:

Investors – Individuals can research brokers and firms to verify credentials, identify any past misconduct, and ensure they are working with a reputable financial professional.
Financial Professionals – Ethical brokers and firms benefit from a public record that showcases their clean track record, qualifications, and industry experience.
Regulators and Compliance Officers – BrokerCheck supports regulators in monitoring industry professionals and enforcing compliance with financial laws and ethical standards.
Financial Firms – Brokerage firms can use BrokerCheck to vet potential hires and ensure they are recruiting qualified professionals with a strong ethical standing.

How to Use FINRA BrokerCheck

Using FINRA BrokerCheck is straightforward and free to access. Follow these steps to look up a broker or firm:

Visit the FINRA BrokerCheck website – Navigate to brokercheck.finra.org.
Enter the broker’s or firm’s name – Type in the full name of the broker or firm you want to research.
Review the search results – Click on the appropriate broker or firm from the search results to access detailed reports.
Examine the disclosed information – Carefully review any regulatory actions, employment history, exams, and disciplinary disclosures.
Use the report to make informed decisions – Investors can use BrokerCheck reports to verify a broker’s legitimacy, while firms and compliance teams can use them for background checks.

What Are the Limitations of BrokerCheck?

While BrokerCheck is a powerful tool, it does have some limitations:

It does not include all financial professionals – Some investment advisers and professionals who are not registered with FINRA may not appear in BrokerCheck.
It may not capture all complaints or disputes – Customer complaints that do not meet certain reporting thresholds may not be disclosed.
Expunged records may not be visible – If a broker has successfully expunged a past disciplinary action, it may no longer appear in BrokerCheck.

Despite these limitations, BrokerCheck remains one of the most valuable resources for assessing the qualifications and integrity of financial professionals.

How BrokerCheck Impacts Financial Professionals

For brokers and firms, maintaining a clean BrokerCheck record is crucial for career longevity and credibility. Negative disclosures such as regulatory sanctions, customer disputes, or employment terminations can severely impact a broker’s ability to attract clients and maintain employment at reputable firms.

Financial professionals should regularly review their own BrokerCheck reports to ensure accuracy and address any discrepancies. In cases where outdated or misleading information appears, brokers may work with legal counsel to seek corrections or expungements where appropriate.

Why You Should Contact Bakhtiari & Harrison

If you are a financial professional concerned about your BrokerCheck record or an investor needing help interpreting a report, Bakhtiari & Harrison can provide guidance. Our team focues on securities industry disputes, FINRA compliance, industry and investor protection matters.

We assist brokers in responding to disciplinary actions, disputing inaccurate records, and navigating regulatory challenges. For investors, we provide due diligence services to help assess financial professionals and ensure safe investment decisions.

Contact Us Today

Whether you are a broker looking to protect your reputation or an investor seeking to verify a financial professional, Bakhtiari & Harrison is here to help. Contact us for a confidential consultation to discuss your concerns and get the guidance you need.