Gene Hines, a 59 year old writer-producer filed an arbitration with the National Association of Securities Dealers against Merrill Lynch (NYSE: MER – news) alleging that his broker misled him in connection with the management of his retirement investments. Mr. Hines has alleged that in recommending the purchase of a variable annuity in his IRA account, Merrill Lynch misrepresented the investment by telling him that the variable annuity it recommended had a minimum rate of return.
Mr. Hines alleges that Merrill Lynch never told him that the “minimum” rate of return was only to be paid on his death.
Mr. Hines is represented by Ryan Bakhtiari, a Beverly Hills and Indian Wells, California based attorney that represents customers in securities arbitrations.
“This type of problem is pervasive in the brokerage industry,” added Ryan K. Bakhtiari. “Public customers nearing retirement often fall victim to the lure of a guaranteed or ‘minimum’ rate of return promised by their brokerage firm.”
The firm represents a number of investors who have suffered losses at full service brokerage firms who purchased variable annuities from brokerage firms that made similar misrepresentations.
FINRA arbitration is a dispute resolution process administered by the Financial Industry Regulatory Authority (FINRA). It provides a forum for resolving monetary disputes between investors and securities firms or brokers without going to court. The process is generally faster and less formal than traditional litigation, and decisions are made by a panel of arbitrators who are knowledgeable in securities law and industry practices. Arbitration through FINRA is binding, meaning the decision is final and enforceable in court. This process is commonly used for disputes involving investment losses, unsuitable recommendations, or misrepresentation. Investors must agree to arbitration in their brokerage agreements, often as a condition of opening an account. While arbitration can be a more efficient way to resolve disputes, it also has limitations, such as limited appeal options and potentially high costs. Despite these challenges, FINRA arbitration remains a crucial mechanism for investor protection and dispute resolution in the securities industry.