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.

SagePoint Financial Investment Lawyers

SagePoint Financial, Inc., formerly headquartered in Phoenix, Arizona, is a broker-dealer and registered investment adviser that provided financial services through a nationwide network of independent financial professionals. As part of the Advisor Group network (now operating under the Osaic brand), SagePoint offered a wide range of investment and advisory services. This overview examines SagePoint’s business model, regulatory history, and compliance framework, with a focus on investor protection.

History of SagePoint Financial

SagePoint Financial originated from the consolidation of legacy firms and operated as a key component of Advisor Group, one of the largest independent wealth management networks in the United States. SagePoint supported thousands of financial advisors across the country, offering access to investment products, insurance, and advisory platforms. In 2023, SagePoint and its sister firms were unified under the Osaic brand, retiring the SagePoint name but continuing its operations under a consolidated structure.

Key Business Metrics

CRD Number

SagePoint Financial was registered under FINRA CRD number 133763. This number is used by regulatory agencies to monitor licensing, disclosure events, and disciplinary actions associated with the firm.

Number of Regulatory Events

SagePoint Financial was involved in multiple regulatory matters over the years, many related to supervisory failures and the sale of complex or alternative investment products. These matters resulted in fines, regulatory settlements, and compliance reform initiatives.

Number of Employees

As part of a large independent broker-dealer network, SagePoint supported thousands of affiliated financial professionals and internal staff. Its structure emphasized advisor independence while providing centralized compliance and operational support.

Assets Under Management (AUM)

SagePoint managed billions of dollars in client assets through a mix of advisory accounts, brokerage services, retirement planning solutions, and insurance-based investment products.

Revenue

The firm generated revenue through advisory fees, brokerage commissions, and product-based compensation, including revenue-sharing arrangements with third-party investment providers.

Regulatory and Compliance Landscape

SagePoint operated under the supervision of FINRA and the SEC. While it maintained a compliance infrastructure consistent with industry standards, its regulatory history reflects the challenges of supervising a dispersed network of independent financial advisors.

Notable Regulatory Issues

SagePoint’s regulatory record includes:

Supervisory Deficiencies: The firm was cited for failing to adequately monitor advisor conduct and enforce policies regarding the sale of high-risk or illiquid products.
Disclosure Violations: Regulators found that SagePoint did not consistently disclose important details about fees, commissions, and investment risks.
Fines and Settlements: The firm paid several penalties in connection with enforcement actions, including failures in compliance systems and oversight of alternative investments.

These regulatory actions highlight the importance of centralized supervision in independent advisory models.

Customer Complaints

Investor complaints involving SagePoint have included:

Unsuitable Investment Recommendations: Clients alleged that advisors recommended investments inconsistent with their financial goals and risk profiles.
Concerns Over Alternative Products: Disputes often centered around the sale of non-traded REITs, private placements, and annuities without adequate disclosure of risk and liquidity restrictions.

Complaints were addressed through internal reviews, customer settlements, and FINRA arbitration proceedings.

Advisor Support and Client Services

SagePoint offered independent advisors access to investment platforms, financial planning tools, compliance resources, and back-office support. The firm’s model encouraged autonomy while maintaining operational and regulatory alignment through its parent organization.

Clients were offered a full suite of services, including portfolio management, retirement planning, insurance, and wealth transfer strategies. However, service consistency depended heavily on the practices and professionalism of the individual advisor.

Customer Experience and Reputation

SagePoint Financial built a reputation as a supportive platform for independent advisors. While the firm offered robust tools and flexible support, its regulatory history underscores the inherent risks of the independent contractor model when not coupled with strong supervisory controls.

Looking Ahead

With SagePoint now operating under the unified Osaic brand, its future will be shaped by how effectively the consolidated entity enhances compliance, technology, and advisor training. A focus on transparency, accountability, and client-first practices will be essential for long-term success.

Final Thoughts

SagePoint Financial provided a platform for independent advisors and served clients nationwide with a range of investment and advisory solutions. Its regulatory record, however, serves as a reminder of the importance of due diligence, oversight, and informed decision-making. For more information, contact Bakhtiari & Harrison.