At Haselkorn & Thibaut, P.A., our experienced FINRA Arbitration lawyers help victims of investment fraud and financial advisor malpractice recover their investment losses. The securities industry laws are complex, involving state and federal regulations, firm-specific policies, and various industry standards. The Financial Industry Regulatory Authority (FINRA) is the governing body overseeing the securities industry, authorized by the United States government to regulate and provide dispute resolution services.
FINRA oversees not only individual brokers but also broker dealers, ensuring they comply with regulations and standards.
Our lawyers not only have extensive experience as former licensed financial advisors, former defense attorneys for large Wall Street investment firms, and for many years now as aggressive securities lawyers for individual investors, but they also have a deep understanding of the complexities involved in cases with investment professionals. They will look at your case from every angle and explain what you can expect every step of the way, from start to finish, throughout the process.
FINRA arbitration is an alternative to state or federal court litigation that allows investors to resolve disputes. Typically an arbitration panel of three arbitrators will review the evidence, hear the arguments, and render a decision, which in most cases is final and binding to all parties.
One of the most significant differences to court litigation are the limited motion practice and streamlined discovery. Typically there are no depositions and the discovery process is limited to only an exchange of documents.
Investment fraud and financial advisor malpractice can be very complex in some cases. It is crucial to have experienced and aggressive securities lawyers on your side to fight to recover your investment losses
The FINRA arbitration attorneys at Haselkorn & Thibaut, P.A., have over 50 years of experience and a 98% success rate. Contact our experienced investment fraud lawyer for a confidential and free consultation at 1-888-885-7162 .
FINRA is a self-regulatory organization (SRO) that oversees broker-dealer firms, registered brokers, and market dealings in the US.
Empowered by the Securities and Exchange Commission (SEC), FINRA writes rules that brokers must abide by, evaluates compliance with those rules, and disciplines brokers that fail to adhere. In order to trade securities with the public, brokers must be registered with FINRA, which administers a rigorous application and examination process. FINRA’s online BrokerCheck tool shows whether a broker is registered with the organization.FINRA also provides educational resources and a space for investors to file complaints about brokers.
Why Does FINRA Exist
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FINRA exists to help the SEC regulate aspects of the securities business, namely brokers and their relationships with consumers.
“Investing is an important part of people’s hard-earned money,” said Harris Kay, a managing partner with Murphy & McGonigle, a law firm specializing in securities law. “They deserve to be in a place that follows the rules.”
A quick tip: Check whether your broker or brokerage firm has been following the rules with FINRA’s BrokerCheck tool.
FINRA’s Services and Duties
Regulate and oversee brokers and brokerage firms.
Once registered with FINRA, brokers must complete ongoing education requirements over the years. Brokers are subject to periodic audits, which check whether a firm and its employees are conducting competent and honest business. If a broker is found to be non-compliant, FINRA can bring disciplinary actions against the individual and/or the firm.
Maintain its BrokerCheck database on brokers and firms.
You can use FINRA’s BrokerCheck tool to check whether a broker is registered. BrokerCheck also provides background information on a broker or firm, including any history of disciplinary action.
Receive and address customer complaints regarding the securities industry.
When you have an issue with your broker or brokerage firm, you can turn to FINRA to file a complaint, which FINRA will then investigate.
Provide dispute resolution services.
When customer complaints evolve into legal action, FINRA provides a forum and lawyers for arbitration and mediation between customers and brokers as an alternative to going to court.
Offer resources and tools for investors.
FINRA has a wealth of personal finance and investing articles and calculators available to beginner and advanced investors alike. It even offers free online investing courses. You can give FINRA a toll-free call, to get help in understanding your investments, whether you don’t understand something in your statements or you want to know more about a hard sell your broker is trying to make. There’s even a specialty helpline for senior citizens.
Surveille equity markets.
FINRA’s technology department plays a strong role in maintaining market integrity by monitoring market transactions and orders every day. Through algorithms and artificial intelligence, FINRA looks for any patterns or signs of market manipulation or fraud. If anything is found, it gets flagged to FINRA’s enforcement team or sent to other relevant parties like the SEC or the securities exchange itself.
FINRA Departments
With such a wide responsibility, FINRA is split into 11 departments, including:
Board and External Relations include Investor Education, Government Affairs, and Communications departments.
Enforcement takes care of FINRA’S disciplinary actions against brokers.
Legal oversees FINRA’s rulemaking and corporate legal functions and includes Corporate Financing and Dispute Resolution departments.
Member Supervision watches over and examines member firms.
Market Regulation Transparency Services works with the SEC and exchanges to watch markets and examine firms to identify any potential market manipulation or fraud. This department also checks that firms remain compliant with federal securities laws.
Office of Hearing Officers provides impartial adjudicators to preside over the disciplinary actions brought forward by the Enforcement Department.
Technology touches all aspects of technology at FINRA, including the algorithms that surveille markets.
What Is FINRA Arbitration?
FINRA arbitration is an alternative to litigating a dispute in court or going through mediation. The arbitration process begins with the filing of a statement of claim, which marks the formal start of the arbitration proceedings. This document outlines the investor’s grievances and the relief they are seeking, essentially setting the stage for the entire arbitration process under the oversight of FINRA, especially in disputes between investors and broker-dealer firms. A written agreement between the investor and the broker-dealer firm often mandates the use of FINRA arbitration.
With FINRA arbitration, a panel of one to three arbitrators will:
Review the investor’s complaint and other pleadings filed by the parties
Hear arguments from all parties
Study the testimonial and documentary evidence
Render a decision.
The decision by the FINRA arbitration panel is referred to as an Award and it is typically “final” and binding on all parties. If the losing party fails to comply with the decision, the prevailing party can seek to have the decision enforced by both FINRA as well as a court of competent jurisdiction. In very limited circumstances, a party may be able to challenge an arbitration award in court.
Why Choose FINRA Arbitration?
Many investors with claims prefer going through FINRA arbitration instead of taking a case to court. This is because FINRA arbitration offers several potential benefits, including:
Do the parties select the arbitrators? The selection involves a ranking process after the parties are given lists of potential arbitrators. Generally, when selecting arbitrators, it is important to look at factors such as the arbitrators’ professional background and experience, the unique legal and factual issues that the case presents, and their individual award histories. Having an opportunity in the ranking and selection of the judge/jury that will decide your case is valuable to some clients.
The discovery process is streamlined. In court litigation, requesting documents and taking depositions can take months or sometimes years to complete. With FINRA arbitration, the process tends to be much more streamlined and efficient. There are no depositions, no filing of expert witness reports, and often a limited hearing to resolve any discovery disputes.
The admission of evidence is more flexible. FINRA arbitrators are not required to adhere to the traditional rules of evidence and procedure. As a result, investors may find it much easier to communicate their version of what happened to the arbitration panel and simply allow the panel to weigh the evidence as it sees fit.
The process is almost entirely confidential. Unlike a court proceeding where the docket is public as well as all filings, the docket, as well as the filed documents that the parties submit during FINRA arbitration, are confidential. After all, most investors want to keep their personal financial details out of public view. (At the same, most broker-deal firms would prefer to avoid the negative publicity that would come from seeing their mistakes being exposed to the public.) However, if the arbitration panel issues an award, FINRA will post the award on its Arbitration Awards Online Database, and the Award itself might be public if the case is not settled confidentially.
Typically, the overall turnaround time is faster. From filing a claim to rendering a decision by the arbitration panel, the process of going through FINRA arbitration takes less time than going through court litigation. In fact, the process typically takes about 12 to 14 months, but an expedited process for investors over age 65 years or suffering any health issues can speed the process up to as little as about 9 months. Timing can be especially important to some investors, especially when they have suffered significant financial losses because of investment fraud or another form of broker negligence or misconduct, and it could impact their life, their retirement and other circumstances.
Keep in mind: Even if you initiate a FINRA arbitration proceeding, the overwhelming majority of claims are still settled amicably by the parties prior to any final hearing or Award. Review our checklist for investment fraud victims and contact us today!
What are the Steps in the FINRA Arbitration Process
Once our attorneys have reviewed your potential claim and agreed to accept the case and move forward with finra arbitrations, you are ready to move forward with the arbitration process, you can expect:
In the context of securities arbitration, it’s crucial to have an attorney experienced in navigating the response process effectively.
When discussing the arbitrator selection process, it’s important to note that this step is
1) A Statement of Claim will be drafted.
The Statement of Claim is the filing that initiates the process. You will review and approve the Statement of Claim prior to filing. Our law office then files the Statement of Claim online with FINRA. Once we file the arbitration claim online, the FINRA arbitration administratively handles the service of the process.
2) Once the financial firm is formally served with the Statement of Claim, it has 45 days to respond.
3) Unlike state or federal court litigation matters, there is very little motion practice in FINRA arbitration.
Lawyers practicing in the FINRA arbitration setting are not going back and forth to the courthouse for hearings. Most FINRA arbitration preliminary hearings are limited to scheduling matters, discovery matters and are conducted telephonically. If there are potential timing issues beyond 6 years, there could be a Motion to Dismiss on limited grounds, and your experienced FINRA lawyers will provide you more details.
4) In addition to the initiation of the discovery process, our legal team will begin the arbitrator selection process.
Each side receives a proposed list of as many as 35 proposed FINRA arbitrator names. Each side ranks certain arbitrators and strikes others. Then, each side submits its respective rankings to the FINRA case administrator, and the administrator finalizes the arbitration panel (typically made up of three arbitrators).
5) The lawyers from both sides and the three arbitrators participate in a telephonic scheduling call to set a date for the final hearing (i.e., trial).
This hearing should generally occur no later than 9 months from the date of the scheduling call. Our law office will coordinate with you before the scheduling conference to ensure you do not have any conflicts. Most of our arbitrations are scheduled for four to five consecutive business days, depending on the issues. You will receive a copy of the Scheduling Order upon receipt.
6) A few months before the final arbitration hearing and after the majority of discovery has occurred, the parties may consider the possibility of mediation. Mediation is completely separate and independent of the arbitration. Despite the similarity of the words, the process refers to two completely different events. The arbitration refers to the actual final hearing or trial that could take place if no settlement is reached by the parties. By contrast, the mediation refers to a structured settlement conference where a professional mediator attempts to help each side assess the case and reach a possible compromised settlement based on the specific facts and details that ucould impact the value of that particular case. Arbitration is typically final and binding after the Award is entered. Mediation is typically a non-binding process.
7) Prior to attending mediation or arbitration, our legal team will schedule telephone calls and/or in-person meetings to discuss the issues, details, and address any questions and/or concerns.
8) Mediation is a non-binding, confidential (typically) one-day settlement conference.
The lawyers on both sides will agree to a mediator, and the mediation will proceed on a dual track where the arbitration process continues unless or until a settlement is reached. If/when the matter settles, then the arbitration is over and dismissed.
9) If the mediation is unsuccessful, then your case continues to proceed to arbitration.
You can expect to prepare with our legal team the week before an arbitration hearing. (The arbitrators will not know what occurred at the mediation as all such discussions or negotiations will be confidential settlement communications.)
When you initially call or email our firm, you will speak directly to one of our attorneys. We will begin by discussing our background and experience. We will also answer any questions you may have regarding the FINRA arbitration process.
We then set up a face-to-face meeting at one of our offices or via zoom if you prefer.
Generally, we can review claims for damages dating back six years from the date of the initial conversation. So, if you had a 20-year relationship with an advisor and firm, we will primarily focus on the most recent six years. The entire relationship is relevant to establish the history and facts, but the legal claims and claimed damages will generally be limited to the most recent six years. This is not always the case and there could be exceptions.
If after reviewing the facts of the case and discussing the background, we are going to accept the case and move forward, you will receive a representation letter if you wish to proceed. We typically handle cases on a contingency-fee basis, which means we do not get paid unless we recover compensation for you.
Before filing an arbitration claim, we will request that you provide all (or at least most) of your account-related documents (i.e. account statements, documents, and correspondence).
FINRA Arbitration Lawyer Tips
Bringing your complaint about a broker to arbitration or mediation can be a more cost-effective method than going to court. While there is a fee for the service, FINRA will provide you with a choice of arbitrators and walk you through the process. While you are not required to retain counsel in such a claim, there are several reasons why you should strongly consider doing so:
An experienced FINRA lawyer will know the industry rules and likely be able to direct the claims in the proper direction. This is not like television, if you think you will just come in and tell your side of the story and simply “win” that is very rarely going to work out in your positive favor. Knowing what claim, what legal cause of action to pursue, and how to prove liability and damages will be part of the expertise and experience you should be seeking.
An experienced FINRA lawyer will know FINRA procedural rules including deadlines that cannot be missed and proper procedures. In fact, selection of the arbitrators is also another area where experienced counsel can prove extremely valuable. A missed deadline, failure to request proper document discovery, untimely responses, or just trying to learn the procedures for the first time when you have so much at stake is just not advisable.
An experienced FINRA lawyer can assist you throughout the claim process. It is reasonable that being thrust into a situation where you have little prior experience, that is adversarial in nature, and that involves your financial security leaves much to be anxious and concerned about. While experienced counsel will not have a crystal ball and cannot tell you how arbitrators might rule in advance, the handholding and guidance so that you know what to expect and when to expect t helps many claimants deal with the uncertainty and unfamiliarity of a process that can often seem quite “arbitrary” in nature.
