finra arbitration

FINRA Arbitration

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FINRA Arbitration Attorneys Help Victims of Investment Fraud

The laws regulating the securities industry are complex, involving both state and federal regulations, in addition to firm-specific policies and industry standards. At Haselkorn and Thibaut, InvestmentFraudLawyers.com, we have extensive experience as former licensed brokers, former defense attorneys for large Wall Street investment firms, and now aggressive securities lawyers for individual investors. We look at your case from every angle and explain what you can expect every step of the way.

FINRA arbitration is an alternative to mediation or courtroom litigation that allows investors to resolve disputes. An arbitration panel reviews the evidence, hears the arguments, and renders a decision, which is typically binding to all parties unless challenged in court.

Investment fraud is a very complicated situation. From discovering the fraud to the FINRA arbitration process – it’s complicated. It is crucial to have experienced and aggressive securities lawyers on your side to fight to recover your investment losses.

FINRA Arbitration
FINRA Arbitration

What Is FINRA?

The Financial Industry Regulatory Authority, commonly known as FINRA, is a nonprofit organization authorized by Congress to protect U.S. investors and hold the broker-dealer industry accountable. When investors suspect fraud or negligence is to blame for their financial losses, FINRA arbitration or mediation is the mechanism for holding brokers and brokerage firms accountable. In 2016, FINRA reported that it:

  • Brought 1,434 disciplinary actions against registered brokers and investment firms
  • Ordered $27.9 million in restitution to harmed investors
  • Levied $176.3 million in fines

What Is FINRA Arbitration?

FINRA arbitration is an alternative to litigating a dispute in court or going through mediation. Today, most disputes between investors and broker-dealer firms are resolved by going through the FINRA arbitration process. In many cases, a written agreement between the investor and the broker-dealer firm requires 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 “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 a court of competent jurisdiction. In limited circumstances, a party may be able to challenge an arbitration decision in court.

Why Choose FINRA Arbitration?

Many wronged investors prefer going through FINRA arbitration instead of taking a case to court. This is because FINRA arbitration offers many 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 and the unique legal and factual issues that the case presents.
  • The discovery process moves faster? In court litigation, requesting documents and taking depositions can take months or years to complete. With FINRA arbitration, the process tends to be much more streamlined and efficient.
  • 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 panel and simply allow the panel to weigh the evidence as it sees fit.
  • The process is largely confidential? Unlike a court case, the documents which the parties submit during FINRA arbitration are confidential. This is another benefit of going through the process. 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.
  • Typically, the overall turnaround time is faster? From the filing of a complaint to the rendering of a decision by the 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. Timing can be especially important to you if you have suffered significant financial losses because of investment fraud or another form of broker negligence or misconduct.

Keep in mind: Even if you initiate a FINRA arbitration proceeding, you can still ultimately reach a settlement of your case. In fact, most securities arbitration matters are resolved through settlements. Review our checklist for investment fraud victims and contact us today!

What are the Steps in the FINRA Arbitration Process

Once our attorneys are ready to move forward with the arbitration process, you can expect:

1) A Statement of Claim will be drafted.  The Statement of Claim is the filing that initiates the lawsuit. You will review and approve the Statement of Claim prior to filing. Our law office then files the Statement of Claim online.  Once we file the arbitration online, the arbitration forum handles service of 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 arbitration. Lawyers that practice in the arbitration setting are not running back and forth to the courthouse for hearings. Most arbitration hearings are conducted telephonically.

4)  In addition to the initiation of the discovery process, our team will begin the arbitrator selection process. Each side receives a piece of paper with 30 arbitrator names. Each side ranks certain arbitrators and strikes others. Then, each side submits its respective rankings to the arbitration 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 the 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 in advance of the scheduling conference to make sure you do not have any conflicts. Depending on the issues, most of our arbitrations are scheduled for five consecutive business days. You will receive a copy of the Scheduling Order upon receipt.

6) A few months prior to the arbitration, the parties routinely discuss the possibility of a mediation.

8) Mediation is a non-binding confidential (typically) one-day settlement conference.  The lawyers on both sides will agree to a mediator to aid in the settlement process. If the matter settles, then the arbitration is over and dismissed.

9) If the mediation is unsuccessful, then your case proceeds 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.)

10) The parties are generally stuck with the result.

What to Expect When You Contact InvestmentFraudLawyers.com

The entire FINRA arbitration process is confidential, except for the award, which is a public document. From initial contact with our attorney to closing a case, the process typically takes about 12 to 14 months. You should know that, statistically, most securities arbitration matters settle.

  1. 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 throughout the FINRA arbitration process.
  2. We then set up a face-to-face meeting at one of our offices or via phone.
  3. Generally speaking, 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.
  4. If you wish to proceed, we will have you execute a retainer agreement.  We typically handle cases on a contingency-fee basis, which means we do not get paid unless we recover compensation for you.
  5. Before actually filing an arbitration claim, we will request that you provide all of your account-related documents (i.e. account statements, signed documents, and correspondence).




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