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.

FSC Securities Investment Lawyers

FSC Securities Corporation, headquartered in Atlanta, Georgia, is a full-service broker-dealer and registered investment adviser that supports independent financial advisors across the United States. The firm provides a wide array of investment products, wealth management services, and advisory platforms to both individual investors and financial professionals. This overview examines FSC’s history, regulatory profile, and operational metrics, with an emphasis on compliance and investor safeguards.

History of FSC Securities

FSC Securities was founded in 1958 and has long operated within the independent broker-dealer space. The firm became part of Advisor Group (now Osaic), one of the nation’s largest networks of independent wealth management firms. Through its affiliation with Osaic, FSC provides advisors with access to technology platforms, compliance support, and investment solutions while maintaining a decentralized, advisor-driven business model.

Key Business Metrics

CRD Number

FSC Securities Corporation is registered under CRD number 7461. This number is used by FINRA and other regulatory bodies to track the firm’s registration status, disclosure history, and disciplinary records.

Number of Regulatory Events

FSC has been involved in numerous regulatory matters, primarily related to supervisory failures, alternative investment sales, and disclosure issues. The firm has responded to regulatory inquiries through settlements, revised procedures, and enhancements to its compliance infrastructure.

Number of Employees

FSC supports hundreds of independent financial advisors and maintains internal teams across compliance, operations, and client support functions. Its national reach allows advisors to operate with independence while receiving back-office and regulatory assistance.

Assets Under Management (AUM)

The firm manages billions of dollars in client assets through a combination of fee-based advisory accounts, commission-based brokerage services, and retirement platforms.

Revenue

FSC generates revenue through advisory fees, brokerage commissions, mutual fund sales, insurance products, and other investment-related services.

Regulatory and Compliance Landscape

FSC Securities is regulated by FINRA and the SEC. While the firm has implemented a range of compliance programs, its regulatory history highlights the ongoing risks of overseeing a dispersed and independent advisor network.

Notable Regulatory Issues

FSC’s regulatory record includes:

Supervisory Deficiencies: The firm has faced citations for failing to supervise the sale of high-risk or complex products, such as non-traded REITs and private placements.
Disclosure Failures: Regulatory actions have also noted lapses in informing clients of product risks, costs, or potential conflicts of interest.
Fines and Settlements: FSC has entered into multiple settlements with regulatory agencies and paid penalties relating to violations of sales practices and supervisory standards.

These issues demonstrate the need for continuous improvements in training, oversight, and risk management.

Customer Complaints

Customer complaints involving FSC Securities have typically included:

Unsuitable Recommendations: Investors have alleged that advisors recommended products not aligned with their financial goals or risk tolerance.
Alternative Investment Losses: Disputes over high-commission products—particularly in the real estate and energy sectors—have been a recurring theme in complaints.

Many of these disputes have been resolved through arbitration, with financial recoveries awarded to affected investors.

Advisor Support and Client Services

FSC provides independent advisors with access to investment platforms, custodial services, compliance tools, and financial planning software. The firm emphasizes advisor independence but requires adherence to firm-wide policies and regulatory standards.

Clients receive access to a wide variety of financial services, including retirement planning, investment management, and insurance solutions. Service levels can vary by advisor, underscoring the importance of firm-level supervision.

Customer Experience and Reputation

FSC has maintained a presence in the independent advisory space for decades, but its reputation has been impacted by regulatory actions and investor complaints. The firm’s affiliation with a larger network like Osaic has supported infrastructure growth but also introduced additional compliance expectations.

Looking Ahead

FSC Securities continues to evolve its technology and compliance systems to meet industry demands and regulatory obligations. As investor expectations rise and regulations grow more complex, FSC must maintain a focus on transparency, advisor oversight, and investor protection.

Final Thoughts

FSC Securities Corporation offers broad support for independent financial advisors and a range of investment solutions for clients. However, its regulatory history reflects the challenges of supervising a decentralized advisor network. For more information, contact Bakhtiari & Harrison.