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.

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.

Can I appeal a FINRA arbitration award?

Generally, you cannot appeal an arbitration decision. However, you can seek to vacate the award on very narrow grounds, such as arbitrator misconduct.

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 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 sue my financial advisor for investment losses?

Yes, investors can pursue legal claims against financial advisors for investment losses caused by broker misconduct, fraud, unsuitable investment recommendations, misrepresentation, or failure to supervise. Most claims are resolved through FINRA arbitration rather than court, due to pre-dispute arbitration clauses in brokerage account agreements. A securities attorney can evaluate whether your losses resulted from actionable misconduct.

How are arbitrators selected in FINRA arbitration?

FINRA uses a Neutral List Selection System (NLSS) to generate a list of randomly selected arbitrators from its roster. For claims over $100,000, a panel of three arbitrators is typically used — one from the public chair category and two from the public or non-public category. Both parties receive the arbitrator lists and have the opportunity to rank and strike candidates they find objectionable.

What is a Form U5 and why does it matter?

Form U5 is the Uniform Termination Notice for Securities Industry Registration. Brokerage firms must file a U5 within 30 days of terminating a registered representative's employment, disclosing the reason for termination. U5 disclosures are publicly visible on BrokerCheck and can severely damage a financial professional's career. If a U5 contains false or defamatory information, the affected individual can challenge it through FINRA arbitration and potentially seek expungement.

What is churning and how do I know if it happened to me?

Churning occurs when a broker executes excessive trades in a customer's account primarily to generate commissions, without regard for the customer's investment goals. Signs of churning include a high volume of trades in your account, frequent buying and selling of the same securities, commissions that seem disproportionate to your account size, and a portfolio that underperforms despite high trading activity. Churning is a violation of FINRA rules and securities law.

What is the statute of limitations for FINRA arbitration claims?

Under FINRA Rule 12206, claims are ineligible for arbitration if the events giving rise to the dispute occurred more than six years before the filing of the arbitration. This is an eligibility rule, not a true statute of limitations, and its application depends on when the specific conduct occurred. Many underlying state and federal securities laws have their own shorter statutes of limitations that run concurrently. Consulting an attorney promptly is critical to preserve your claims.

What is the difference between FINRA arbitration and mediation?

Mediation is a voluntary process where a neutral mediator helps the parties negotiate a settlement. It is separate from arbitration and non-binding.

Do I need an attorney for FINRA arbitration?

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.

What is elder financial fraud in the securities industry?

Elder financial fraud in the securities industry occurs when brokers or advisors exploit elderly investors through unsuitable investments, unauthorized trading, excessive fees, misrepresentation, or outright theft. FINRA has specific rules protecting senior investors, including requirements that firms have reasonable grounds to believe recommendations are suitable for customers of advanced age. Victims can recover losses through FINRA arbitration.

How does FINRA arbitration work for California investors?

California investors have access to FINRA arbitration hearings held at FINRA's Los Angeles hearing office. California also has its own securities laws under the California Corporations Code (the 'Blue Sky' laws) that may provide additional protections and remedies beyond federal law. California investors pursuing FINRA arbitration claims may assert both federal and state law causes of action. Bakhtiari & Harrison is headquartered in Los Angeles and represents California investors in both FINRA arbitration and California state and federal courts.

What should I do if I suspect my broker committed fraud?

If you suspect your broker committed fraud, take the following steps immediately: (1) Gather and preserve all account statements, trade confirmations, and correspondence with your broker. (2) Do not contact the brokerage firm or sign any documents they send. (3) Check your broker's BrokerCheck record at finra.org to see if there are prior complaints. (4) Contact a securities attorney for a free consultation to evaluate your claim. (5) Be aware of time limits — waiting too long can bar your claims. Bakhtiari & Harrison offers free consultations and can be reached at (800) 382-7969.

FAQs — FINRA Arbitration & Investment Fraud – Bakhtiari & Harrison

Written and reviewed by

Ryan Bakhtiari, Partner — Bakhtiari & Harrison

Admitted: CA | NY | TX | DC | Multiple Federal Courts · Super Lawyers 2005–2026 · Former PIABA President · Former FINRA NAMC Chairman · Last reviewed: April 2026

Bakhtiari & Harrison represents investors and financial professionals in FINRA arbitration, securities litigation, and employment matters nationwide. The following frequently asked questions address the most common questions the firm receives from prospective clients. For specific practice area information, use the links throughout this page to navigate to the relevant service pages. Ryan Bakhtiari served as Chairman of the FINRA National Arbitration and Mediation Committee — the body that writes the rules governing FINRA arbitration. Initial consultations are free. Investor cases are handled on a contingency fee basis — no recovery, no fee.

FAQs For investors — FINRA arbitration and investment fraud claims

What is FINRA arbitration?

FINRA arbitration is the primary dispute resolution process for investor claims against broker-dealers and registered representatives. Most brokerage account agreements contain pre-dispute arbitration clauses requiring disputes to be resolved through FINRA rather than court. FINRA arbitration is administered by FINRA’s Dispute Resolution Services and is governed by the FINRA Code of Arbitration Procedure. Hearings are held at FINRA regional hearing locations near the claimant’s residence. For more detail visit the Securities Arbitration page.

How do I know if I have a FINRA arbitration claim?

If you invested through a FINRA-registered broker or brokerage firm and suffered losses you believe resulted from unsuitable recommendations, misrepresentation, unauthorized trading, churning, overconcentration, or other misconduct — you may have a claim. Bakhtiari & Harrison evaluates all potential claims at no charge. Common claim types are described on the Advisor Misconduct page.

What is the deadline to file a FINRA arbitration claim?

Under FINRA Rule 12206, claims must be filed within six years of the events giving rise to the dispute. California investors may also have state law claims with shorter limitations periods — some as short as two years from discovery. Contact Bakhtiari & Harrison promptly — time limits are strictly enforced and missing the deadline permanently closes the claim.

How long does FINRA arbitration take?

FINRA arbitration typically takes 12 to 18 months from filing to award for standard cases. Cases involving larger damages, multiple parties, or complex legal and factual issues may take longer. Bakhtiari & Harrison manages the complete process from initial claim evaluation through the evidentiary hearing and award.

How much does FINRA arbitration cost?

Bakhtiari & Harrison represents investors on a contingency fee basis — the firm is only paid if it recovers money for you. If the firm does not recover, you owe nothing. FINRA charges filing fees that vary based on the amount of the claim — these are separate from attorney fees and are typically paid by the claimant at filing, though they may be recoverable as part of the award. For more detail visit the Securities Arbitration page.

What damages can I recover in FINRA arbitration?

FINRA arbitrators can award compensatory damages (out-of-pocket losses and consequential damages), interest, attorneys’ fees in appropriate cases, and punitive damages for egregious conduct. There is no cap on damages in FINRA arbitration. The firm’s $54.1 million Citigroup award — the largest FINRA arbitration award ever levied against a major Wall Street brokerage in favor of individual investors — included $17 million in punitive damages.

Is FINRA arbitration confidential?

Yes. FINRA arbitration is a private proceeding — not a court proceeding and not public record. The hearing, evidence, and award are confidential unless a court confirmation proceeding is required. This is an important distinction from court litigation and is particularly relevant for high-profile investors and financial professionals for whom public exposure is a concern.

What is the difference between FINRA arbitration and a securities lawsuit?

FINRA arbitration is faster, less expensive, and confidential compared to court litigation, and is required by most brokerage account agreements. Securities litigation in state or federal court is appropriate when the defendant is not a FINRA member, when the arbitration clause is unenforceable, when injunctive relief is needed, or when the case is most efficiently pursued as a class action. For more detail visit the Securities Litigation and Class Actions pages.

What types of investment products give rise to FINRA arbitration claims?

Any investment product recommended by a FINRA-registered broker can give rise to a FINRA arbitration claim if the recommendation was unsuitable or involved misrepresentation. Common product failure claims involve non-traded REITs, structured notes, variable annuities, private placements, leveraged and inverse ETFs, and alternative investments. For specific product information visit the Product Failure page.

Does the firm represent investors outside California?

Yes. Bakhtiari & Harrison represents investors in all 50 states. Ryan Bakhtiari is admitted in California, New York, Texas, the District of Columbia, and multiple federal courts. FINRA arbitration hearings are held near the claimant’s residence — distance is never a barrier to representation.

What should I do if I think my financial adviser defrauded me?

First, gather all account statements, trade confirmations, and written communications from your adviser — do not discard anything. Second, do not contact your adviser or firm directly about the potential claim — anything you say can be used against you. Third, contact Bakhtiari & Harrison for a free consultation as soon as possible. Time limits apply and early action preserves the most options.

For financial professionals — expungement, compensation, and regulatory matters

What is FINRA expungement?

FINRA expungement is the formal process for removing a meritless customer dispute disclosure from a broker’s CRD record — which is publicly visible on FINRA BrokerCheck. Expungement requires a FINRA arbitration hearing and is only granted when a panel finds the complaint was factually impossible, clearly erroneous, or false. For full detail visit the FINRA Expungement page.

Can I seek expungement if the customer complaint was settled?

Yes — settlement of the underlying complaint does not bar expungement. However, FINRA’s 2023 rule changes impose a three-year filing deadline from the close of the underlying proceeding. Financial professionals should consult counsel promptly after any settlement to preserve their expungement options.

My firm filed a false U5 — what can I do?

A false or misleading U5 can be challenged through FINRA expungement proceedings and in some cases through a direct defamation claim in court. Bakhtiari & Harrison handles both approaches. Visit the Employment Disputes and FINRA Expungement pages for more detail.

My firm withheld my bonus — what are my options?

If your firm withheld bonus compensation you had earned prior to departure, you may have claims for breach of contract, unjust enrichment, and in California, violation of the Labor Code. Visit the Compensation Disputes page for full detail.

I have an outstanding promissory note — what happens if I change firms?

The outstanding balance becomes immediately due upon departure in most cases, and firms typically pursue repayment through FINRA arbitration. A strong counterclaim posture — asserting withheld compensation, false inducement, and other claims — significantly changes the outcome of promissory note proceedings. Visit the Compensation Disputes and Promissory Notes pages for detail.

What should I do if I receive a FINRA inquiry about an outside business activity?

Do not respond to FINRA or your firm without legal counsel — any response is on the record. Contact Bakhtiari & Harrison immediately. The earlier counsel is engaged, the more resolution options are available. Visit the Outside Business Activities page for full detail on the investigation process.

About Bakhtiari & Harrison

Where is Bakhtiari & Harrison located?

Bakhtiari & Harrison is headquartered at 12711 Ventura Blvd., Suite 315, Studio City, CA 91604. The office is minutes from Beverly Hills, Burbank, and the broader Los Angeles metro area. The firm represents clients nationwide — FINRA arbitration hearings are held near the claimant’s location, so distance is never a barrier. FAQs

How does contingency fee representation work?

For investor cases, Bakhtiari & Harrison is only paid if it recovers money for you. If the firm does not recover, you owe nothing. There are no upfront legal fees and no charge for the initial consultation. For financial professional matters — expungement, compensation disputes, employment disputes, and regulatory defense — the firm works on a flat fee or hourly basis depending on the matter type.

How do I get started?

Call (800) 382-7969 or use the Contact Us form to schedule a free, confidential consultation. Bakhtiari & Harrison reviews every potential matter at no charge and advises on available options, likely outcomes, and recommended strategy before any engagement.

Who are the firm’s attorneys?

Bakhtiari & Harrison is a two-partner firm. Ryan Bakhtiari served as Chairman of the FINRA National Arbitration and Mediation Committee from 2013 to 2017 and as President of PIABA, and has been a Super Lawyer every year from 2005 to 2026. David Harrison is a former New York City assistant district attorney and former Morgan Stanley Dean Witter in-house counsel who began his career as a Series 7-licensed registered representative at Shearson Lehman Brothers, and has been a Super Lawyer every year from 2015 to 2026.

Contact a securities attorney — free consultation

Contact Bakhtiari & Harrison for a free, confidential consultation. Our FINRA attorneys review every potential case at no charge.

Investor cases are handled on a contingency fee basis — no recovery, no fee.

Call: (800) 382-7969 | Contact Us