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.

California Investment Fraud Lawyer, Securities Attorneys, SEC & FINRA Securities Law Firm

Q: 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.

California investment fraud lawyers Bakhtiari & Harrison are a premier law firm focused on the representation of California-based clients in FINRA arbitration and litigation in matters involving the securities industry. The firm’s partners have substantial experience in securities, employment, and regulatory matters. Our focus is on delivering strategic and creative client-centric solutions and providing results to our clients. Across four decades we’ve developed a niche practice, we represent individuals and institutions in securities arbitration and litigation claims before FINRA (the Financial Industry Regulatory Authority, AAA (American Arbitration Association) and in state and federal courts around the country.

Retaining an attorney and law firm is an important decision made with great care, in fact the retention of counsel after a dispute arises maybe the single most important decision a potential litigant makes. The Importance of Selection of Counsel cannot be overstated, please read our more detailed description concerning our qualifications, experience and credentials.

Aggressive Securities and Investment Fraud Lawyers

At Bakhtiari & Harrison, we focus on quality, aggressive advocacy, rigorous preparation, and client-focused results. We bring decades of experience and the resources to offer personalized service tailored to your needs. We understand the unique needs and concerns of each client and implement an effective and compelling strategy from the outset. How can a California investment fraud lawyer assist you?

In the complex world of securities trading, adherence to legal and ethical standards is paramount. California has established a robust legal framework to ensure the integrity of its financial markets and protect investors from malpractices. California investment fraud lawyers focus on common violations under the California Securities Code, including suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business advantage. If you have been exposed to misconduct in the securities industry and experienced financial loss, California investment fraud lawyers at Bakhtiari & Harrison may be able to assist you.

Common Customer Claims

Suitability Under California Securities Law and FINRA Rules

One of the fundamental principles under the California Securities Code is the requirement for investment advisers and brokers to ensure that their investment recommendations are suitable for their clients. Advisers must consider the client’s financial situation, investment objectives, and risk tolerance when making recommendations. This “suitability” standard mandates a thorough understanding of the client’s needs and the characteristics of the investments being recommended. The suitability rule is also codified in FINRA’s rules, policies, and procedures. Each firm educates and supervises its employees and customer accounts to make sure that suitable investments are recommended to their customers.

A violation occurs when a broker or adviser recommends unsuitable investments by failing to consider the client’s unique circumstances. Investing client assets in vehicles that carry excessive risk or volatility can lead to significant financial losses for the client and potential legal liability for the adviser and firm. California investment fraud lawyers gather the evidence and present it along with arguments to persuade arbitrators of the lack of suitability. The California suitability requirement is integral to protecting investors from inappropriate and potentially harmful investment strategies. Recently, the enactment of FINRA’s Regulation Best Interest or “Reg BI” provides additional investor enhancements.

Unauthorized Trading in California

Unauthorized trading is explicitly prohibited under California Corporations Code § 25235. This section mandates that brokers obtain explicit consent from clients before executing trades on their behalf. Unauthorized trading involves executing transactions without the client’s knowledge or approval, breaching the fiduciary duty that brokers owe to their clients.

This violation can result in severe financial consequences for the client and disciplinary action against the broker, including fines, suspension, or revocation of their license. Ensuring that clients are fully aware of and approve all transactions is critical to maintaining trust and compliance with California securities regulations. California investment fraud lawyers Bakhtiari & Harrison represent victims of investment fraud and abuse of discretion. Exercising unlawful time and price discretion can be another form of unauthorized trading. California investment fraud lawyers commonly prosecute these civil claims.

Misrepresentations or Omissions Under California Securities Law

California Corporations Code § 25401 addresses misrepresentations and omissions of material facts in the sale of securities. Brokers and advisers are prohibited from making false statements or omitting crucial information that could affect an investor’s decision-making process. Misrepresentations can include false claims about the financial health of a company, the risks associated with an investment, or the expected returns.

Investors rely on accurate and complete information to make informed decisions. Any deviation from this standard undermines market integrity. California investment fraud lawyers Bakhtiari & Harrison represent victims of investment fraud that has caused significant investor harm. Violations of California § 25401 can result in civil liabilities, including rescission of transactions and monetary damages.

Failure to disclose material information is closely related to misrepresentations and is governed by the same section, California Corporations Code § 25401. California investment fraud lawyers Bakhtiari & Harrison represent victims of investment fraud or omissions in disclosing material facts. This provision requires full and fair disclosure of all relevant information that an investor would need to make an informed decision. Failure to disclose such information is considered fraudulent and deceptive.

Material information can include details about the financial performance of an investment, potential conflicts of interest, or any other fact that could influence an investor’s decision. Transparency is essential in the securities industry, and failure to uphold this standard can lead to legal action and penalties.

Other California Code Violations that Occur

Several other common violations under the California Securities Code relate to trading securities, including:

Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, violating fiduciary duties as outlined in California Corporations Code § 25218.
Front-Running: Brokers executing orders on a security for their own account while taking advantage of advance knowledge of pending orders from their customers, which can violate California Corporations Code § 25216(a).
Ponzi Schemes: Investment frauds that pay returns to earlier investors from the new capital contributed by newer investors rather than from profit earned, falling under fraudulent schemes addressed by California Corporations Code § 25401.
Insider Trading: Trading a public company’s stock or other securities based on material, non-public information about the company, violating fair market practices as described in California Corporations Code § 25502.
Failure to Supervise: Supervisors failing to adequately oversee the actions of brokers, leading to various forms of misconduct, which is addressed under California Corporations Code § 25216(c).

What is FINRA Arbitration and How Does it Work?

FINRA arbitration starts when one party, known as the “claimant,” files a statement of claim. This could be an investor who thinks their broker acted unfairly or broke the rules. The person accused, called the “respondent,” then responds to the claim. Here are the basic steps of FINRA arbitration:

Filing a Claim: The claimant explains the dispute and what happened. The respondent has time to answer the statement of claim.
Selecting Arbitrators: Arbitrators are neutrals who make the final decision in the case. For smaller cases, there may be a single arbitrator, while larger cases might have three. This is a key moment in the life of every case. Experienced California investment fraud lawyers at Bakhtiari & Harrison have appeared before many of the arbitrators found in California-based pools for decades.
Pre-Hearing Conferences and Discovery: Before the hearing, both sides share documents and information to prepare their cases. This is called discovery.
Hearing: At the hearing, both sides present their case, bring in evidence, and question witnesses. The California investment fraud lawyers at Bakhtiari & Harrison aggressively advocate for our clients. The arbitrators listen to the evidence presented by both sides and render an award.
Award: After the hearing, the arbitrators make a decision and issue what’s called an award. This decision is final, and both parties must follow it.

Investors Should Contact Our Experienced California Investment Fraud Lawyers

If you’ve been the victim of investment fraud, contact the California investment fraud lawyers at Bakhtiari & Harrison for a free initial consultation. We represent victims of financial and investment disputes throughout California, including Bel Air, Beverly Hills, Brentwood, Culver City, Encino, Hancock Park, Hidden Hills, Hollywood Hills, Los Angeles, Malibu, Orange County, Pacific Palisades, Palm Springs, Pasadena, San Diego, San Francisco, Santa Barbara, Santa Monica, Studio City, Toluca Lake, Ventura County and other locations. Our California investment fraud lawyers will work tirelessly in pursuit of financial compensation for your investment losses.