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.

FINRA Expungement – Trusted Securities Lawyers for Registered Persons

If you’re a financial advisor with a customer complaint or dispute disclosure on your record, you know how damaging even one blemish can be. Whether the complaint was false, frivolous, or settled without merit, it remains publicly visible on FINRA’s BrokerCheck and your CRD file—potentially affecting your reputation, your business, and your future opportunities. A FINRA expungement case maybe your only remedy. Likewise, certain disclosures can also affect your ability to be employed in the securities industry.

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Filing a claim for FINRA expungement is the last remedy to correct misstatements on a regulatory record. Maintaining a pristine reputation in the securities industry is paramount, especially today when licensed broker and Investment Advisor records are readily accessible through FINRA’s BrokerCheck and the SEC website. Regulators have increased transparency by mandating firms to include links to BrokerCheck on their websites, making it easier for consumers to access these records.

FINRA expungement is a formal process allowing brokers to remove certain customer dispute information from their Central Registration Depository (CRD) records. This is important because dispute records can negatively impact a broker’s reputation, even if the claims are unsubstantiated or misleading. To pursue expungement, brokers must go through FINRA’s arbitration process, where a panel of arbitrators reviews the case based on strict criteria, such as evidence that the claim is false or defamatory. Expungement is only granted in approriate cases to maintain the integrity of CRD records, ensuring that only deserving claims are cleared from public view.

Understanding how it works—and when it’s appropriate—is the first step toward protecting your name.

What is FINRA Expungement?

In 2009, FINRA implemented significant changes to the rules governing how customer complaints are recorded on a stock broker’s Central Registration Depository (CRD) record. These changes shifted the responsibility onto firms to decide what types of disclosure information need to be reported. This revision in reporting rules came alongside a more aggressive stance from regulators concerning the interpretation of these disclosure requirements.

Whenever a customer complaint is lodged, the employer in the securities industry must update the professional’s Form U4 within 30 days to reflect the complaint on the broker’s CRD record. This can result in even product-related failures being noted on a broker’s CRD if the firm practices aggressive reporting, potentially impacting the broker’s career adversely.

In such cases, the expertise of FINRA expungement attorneys and FINRA attorneys becomes crucial. These legal professionals are experienced in navigating the complexities of the financial industry’s regulatory environment. Expungement attorneys are skilled in the processes involved in removing unwarranted or outdated complaints from a broker’s CRD record, which can be essential for preserving their professional reputation. Similarly, FINRA expungement attorneys are adept at defending brokers and advisors in regulatory disputes, helping ensure that their records fairly reflect their history and qualifications.

These attorneys play a vital role in managing and correcting records on BrokerCheck and other public databases, providing strategic advice and representation in disputes over disclosure and reporting. Their involvement is critical for professionals seeking to maintain a clean and accurate public record, addressing any discrepancies and defending against unwarranted claims. FINRA Expungement

For brokers and investment advisors facing challenges with their public records or dealing with aggressive regulatory interpretations, partnering with a knowledgeable FINRA expungement attorney or securities attorney can be instrumental. FINRA expungement attorneys focusing on this area not only help in correcting and expunging records but also provide robust defense in cases of regulatory inquiries or complaints, ensuring that professionals in the securities industry can continue their careers without undue reputational harm.

A brokerage firm must file a Form U5 within 30 days of the termination of a securities industry professional’s employment. The U5 form must accurately disclose the reason for the advisor’s termination.

As a result, being vigilant in protecting your reputation has become more important. Representatives have a right to seek the expungement of negative disclosures from the CRD system when:

A customer has filed a false claim or complaint,
A customer has filed a claim or complaint that is clearly erroneous, and/or
A customer has filed a claim or complaint about a transaction in which you were not involved.

The FINRA Expungement Process

The typical FINRA expungement process begins with filing an arbitration claim through FINRA. This usually names the advisor’s current or former firm and seeks a recommendation for expungement. An independent arbitrator—or a panel of three—reviews the case in a formal hearing. The advisor must demonstrate that the complaint meets one or more specific criteria for expungement.

If the panel agrees, they will issue a written decision recommending expungement. However, that’s not the final step. Advisors must then petition a court to confirm the award. Only after a judge signs off will FINRA remove the disclosure from the CRD and BrokerCheck. The final court order is then provided to FINRA requiring removal of the offending occurence from the registered persons regulatory record.

Common Challenges

One of the biggest misconceptions is that a dismissed or settled complaint automatically disappears. It doesn’t. Expungement requires proactive legal action. Another challenge is timing—recent rule changes limit when an advisor can file, and most expungement requests must now be filed within a narrow window.

Why Legal Support Matters

Because the process is highly technical, experienced legal counsel is critical. A FINRA securities attorney will ensure your claim is properly filed, present a compelling case to arbitrators, and guide you through the court confirmation process. With the right guidance, you can maximize your chances of clearing your name and moving forward with a clean record. Missteps can be difficult to overcome, taking the right steps in protecting your name and regulatory record should be a significant concern for any registered person.

If you’re considering expungement, don’t navigate it alone. Professional support can make all the difference. Advisors generally have only one opportunity to seek expungement for a specific complaint. A misstep can mean the door closes permanently. If you have suffered from a false or erroneous customer complaint or other type of disclosure, contact Bakhtiari & Harrison to discuss your FINRA expungement options.