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.

Oregon Investment Fraud Lawyer, Securities Attorney, SEC & FINRA Securities Law Firm

Oregon investment fraud lawyers at Bakhtiari & Harrison are focused on the representation of Oregon based clients in complex arbitration, litigation, and related legal services in matters involving the securities industry. The firm’s partners have extensive experience in securities, employment and regulatory matters. Our focus is on delivering strategic and creative client-centric solutions.

Oregon Financial Dispute Clients can Rely on Bakhtiari & Harrison to Handle All Types of Litigation and Arbitration Regarding Stock Brokers, Financial Investment Firms, and the Securities Industry

We represent individuals and institutions in securities arbitration and litigation claims before FINRA (Financial Industry Regulatory Authority, AAA (American Arbitration Association) and other arbitration providers.

How an Oregon Investment Fraud Lawyer Can Help You

If you are located in Oregon, have experienced financial loss, and are searching for an Oregon investment fraud lawyer, Bakhtiari & Harrison may be able to assist you. We represent Oregon based investors and clients with these and other types of investment fraud and financial advisor misconduct cases.

Understanding Oregon Securities Code Violations in Trading Securities

Navigating the complexities of securities trading requires a firm understanding of legal and ethical obligations. Oregon has established a strong legal framework to ensure the integrity of financial markets and to safeguard investors from unethical practices. This post will explore key violations under Oregon’s securities laws, focusing on suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business practices.

Suitability Under Oregon Securities Law

A key tenet of Oregon’s securities law is the requirement that brokers and investment advisers recommend only suitable investments to their clients. Under Oregon Revised Statutes (ORS) § 59.135, brokers must consider the client’s financial situation, risk tolerance, and investment goals when making recommendations. Failure to meet this “suitability” requirement may result in significant financial losses for the client and expose brokers to legal liability.

Unsuitable recommendations occur when a broker suggests investments that do not align with a client’s specific circumstances. Protecting investors from inappropriate investment strategies is crucial for maintaining trust and stability in the securities market.

Unauthorized Trading in Oregon

Oregon law also prohibits unauthorized trading under ORS § 59.135(2). Brokers must obtain explicit consent from clients before executing trades on their behalf. Oregon investment fraud lawyers at Bakhtiari & Harrison investigate and prosecute unauthorized trading claims. Unauthorized trading involves brokers making trades without the client’s knowledge or approval, violating their fiduciary duty.

Such violations can result in severe consequences, including financial losses for the client and disciplinary actions for the broker, such as fines, suspensions, or revocation of their license. Ensuring transparency and client approval is key to complying with Oregon’s securities regulations.

Misrepresentations Under Oregon Securities Law

Misrepresentations in the sale of securities are addressed under ORS § 59.135(1). Brokers and advisers are prohibited from making false statements or omitting key information that could affect an investor’s decision. Misrepresentations may include exaggerating a company’s financial health, understating the risks associated with an investment, or inflating expected returns.

Investors depend on accurate and complete information to make informed decisions. Misleading statements undermine the market’s integrity and can lead to significant harm. Oregon law allows investors to seek civil remedies, including the rescission of transactions and damages, when such violations occur.

Failure to Disclose Material Information

Closely related to misrepresentation, the failure to disclose material information also falls under ORS § 59.135(1). Brokers must provide full disclosure of all material facts that could influence an investor’s decision-making process. Withholding important information, such as financial performance details or potential conflicts of interest, is considered deceptive.

Oregon’s legal framework emphasizes the importance of transparency, and failure to disclose relevant information can result in civil penalties and legal action.

Unfair Business Practices in Oregon

Oregon’s Unlawful Trade Practices Act (UTPA), ORS § 646.608, addresses unfair business practices within the securities industry. This law prohibits any deceptive, fraudulent, or unfair business practices, including insider trading, market manipulation, or exploiting non-public information for personal gain.

Violations of the UTPA can result in significant consequences, including injunctions, restitution, and civil penalties. These provisions help protect market fairness and investor confidence.

Common Code Violations in Trading Securities

In addition to the violations mentioned, other common issues include:

Churning: Excessive trading in a client’s account for the sole purpose of generating commissions, which is prohibited under ORS § 59.135(2).
Front-Running: Brokers executing orders based on advance knowledge of customer trades, violating ORS § 59.135(2).
Ponzi Schemes: Fraudulent schemes that pay returns to earlier investors from the capital of newer investors, addressed by ORS § 59.135(1).
Insider Trading: Using material, non-public information to trade securities, a violation under ORS § 59.205.
Failure to Supervise: Supervisors failing to adequately monitor brokers, leading to misconduct, which is covered under ORS § 59.205.

Oregon’s comprehensive securities laws provide a strong foundation for investor protection and market integrity. By adhering to these regulations, both brokers and advisers can help maintain a fair and ethical trading environment.

Harmed Investors Should Contact Our Experienced Oregon Investment Fraud Lawyers

If you’ve been the victim of investment fraud, contact the Oregon investment fraud lawyers at Bakhtiari & Harrison for a free initial consultation. We represent victims of financial and investment disputes throughout Oregon including Portland, Salem, Eugene, Gresham and Hillsboro. Oregon investment fraud lawyers at Bakhtiari & Harrison will work tirelessly in pursuit of financial compensation for your investment losses.