Securities Arbitration Lawyers – Bakhtiari & Harrison

What is FINRA arbitration?

FINRA arbitration is the primary dispute resolution mechanism for investor claims against broker-dealers and registered representatives. Almost every brokerage account agreement contains a pre-dispute arbitration clause — meaning that by opening an account, the investor has agreed to resolve disputes through FINRA arbitration rather than court litigation. This makes FINRA arbitration the starting point for the vast majority of investor claims against the financial services industry.

FINRA arbitration is administered by FINRA’s Dispute Resolution Services and governed by the FINRA Code of Arbitration Procedure. Hearings are held at FINRA regional hearing locations near the claimant’s residence. For most investors, this means the closest major city — for California investors, either Los Angeles or San Francisco.

FINRA arbitration vs. court litigation — key differences

• Confidentiality: FINRA arbitration is a private proceeding — not public record. Court litigation is public. This distinction matters for investors who value privacy and for high-profile clients for whom public exposure is a concern.
• Speed: FINRA arbitration typically resolves in 12 to 18 months from filing to award. Court litigation in federal securities cases can take three to five years or longer.
• Cost: FINRA arbitration is generally less expensive than federal court litigation, with lower discovery costs and no jury selection.
• Arbitrators: FINRA arbitration panels are composed of arbitrators with securities industry knowledge — not generalist jurors. This can be an advantage in complex cases involving sophisticated financial products.
• Finality: FINRA arbitration awards are binding and final. Grounds for appeal are narrow — limited to fraud, corruption, evident partiality, or arbitrators exceeding their authority. This means the stakes of each hearing are high.

The FINRA arbitration process — step by step

1. Initial case evaluation. Bakhtiari & Harrison reviews account statements, trade confirmations, and correspondence at no charge to assess the strength of the claim and potential recovery.
2. File a Statement of Claim. The firm files with FINRA’s Dispute Resolution Services, identifying the respondents, setting out the facts and legal theories, and specifying damages.
3. Respondent answers. The brokerage firm and/or broker files an answer. In most cases, respondents deny liability and assert affirmative defenses.
4. Arbitrator selection. For claims over $100,000, a three-arbitrator panel is appointed. Both sides rank and strike arbitrators from lists provided by FINRA. The firm’s experience with regional arbitrator pools is a direct strategic advantage in this process.
5. Both sides exchange account statements, trade confirmations, suitability questionnaires, internal firm communications, supervisory records, and other relevant documents.
6. Pre-hearing preparation. The firm prepares the evidentiary record, identifies and retains expert witnesses where appropriate, and develops the case theory and damages analysis.
7. Evidentiary hearing. The parties present evidence and arguments to the arbitration panel. Bakhtiari & Harrison handles all aspects of the hearing — opening statements, direct and cross-examination, expert testimony, and closing arguments.
8. The panel issues a binding written award, typically within 30 days of the final hearing session. Awards are enforceable in federal court under the Federal Arbitration Act.

Types of investor claims handled in FINRA arbitration

Bakhtiari & Harrison handles the full range of investor claims in FINRA arbitration. Common claim types include advisor misconduct (suitability violations, misrepresentation, unauthorized trading, churning, overconcentration), investment product failures (non-traded REITs, structured notes, variable annuities, private placements), elder financial fraud (exploitation of elderly investors), Ponzi and pyramid schemes (fraudulent investment schemes), and high-net-worth investor claims involving complex financial structures and private placements.

Why Bakhtiari & Harrison in FINRA arbitration

• FINRA arbitration rulemaking. Ryan Bakhtiari served as FINRA National Arbitration and Mediation Committee Chairman from 2013 to 2017 — the body that writes the rules governing every FINRA arbitration proceeding. He presently serves as a FINRA securities arbitrator. This dual perspective — rule writer, active arbitrator, and advocate — is unmatched.
• Inside knowledge of brokerage firm strategy. David Harrison spent years as Morgan Stanley Dean Witter in-house counsel, defending the firm against FINRA claims. The firm knows how major broker-dealers build their defenses and how to defeat them.
• $250 million+ recovered. Including a $54.1 million FINRA award against Citigroup — the largest FINRA arbitration award ever levied against a major Wall Street brokerage in favor of individual investors, according to the Wall Street Journal.
• Nationwide arbitration representation. The firm represents investors at FINRA hearing locations throughout the United States. Ryan Bakhtiari is admitted in California, New York, Texas, the District of Columbia, and multiple federal courts.
• Contingency fee representation. No recovery, no fee. Initial consultations are free.

Frequently asked questions — FINRA arbitration

Do I have to use FINRA arbitration or can I file a lawsuit?

In almost all cases, brokerage account agreements contain pre-dispute arbitration clauses that require claims to be resolved through FINRA arbitration rather than court. These clauses are enforceable under the Federal Arbitration Act. If your agreement contains such a clause — and most do — FINRA arbitration is the primary path to recovery. In limited circumstances, court litigation may be available as an alternative or supplement to arbitration. Bakhtiari & Harrison evaluates the best path to recovery for each client’s specific situation.

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 on behalf of clients from initial filing through award and, where necessary, court enforcement.

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. The $54.1 million Citigroup award handled by the firm included $17 million in punitive damages — demonstrating that FINRA panels will award significant punitive damages when the facts warrant it.

Is FINRA arbitration confidential?

Yes. FINRA securities arbitration is a private proceeding — the hearing, the evidence, and the award are not public record unless a court confirmation proceeding is required. This confidentiality 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.

Contact a securities arbitration lawyer — free consultation

Contact securities arbitraiton lawyers at 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.

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