FINRA Arbitration

What is FINRA Arbitration?

FINRA arbitration is a mandatory resolutions forum in the securities industry. In the financial industry, there is ample opportunity for wrongdoing on the part of a broker, due to the inherent tension between the desire and opportunity to make larger commissions by inappropriate use of the client’s account and the responsibility to always do what is best for the client. Professionalism usually wins out, and an ethical financial professional can make an excellent income while serving the needs of those whose investments he or she manages. But there are potential pitfalls, even for an honest broker. Markets are not always predictable, and returns on an investment can never be guaranteed. That there will be losses along the way is a given. A client who expected better results might shout “fraud” when a downturn in the market or an unfortunate bad call by a well-meaning broker causes a loss.

When disputes arise, clients have the right to make a legal claim for damages against the broker. Taking a case to the courts can be an extremely long, slow, and expensive process. A more efficient alternative is arbitration through FINRA, the Financial Industry Regulatory Authority, which was formed as a merger of the regulatory committee of the New York Stock Exchange and the National Association of Securities Dealers. FINRA oversees the activities of brokers, dealers, and investors.

What is Arbitration?

Arbitration is an alternative to using the court system to settle disputes. In a FINRA arbitration, parties to a dispute will present their cases to an impartial person, an arbitrator, who has completed FINRA’s arbitrator training program. Arbitration is much quicker and less expensive than a law suit, and the arbitrators, with specific training in dispute resolution, are often able to resolve difficult and complex disputes relatively quickly and effectively. FINRA arbitrators may be either public or non-public. Public arbitrators are not required to have specific knowledge of the securities industry, whereas non-public arbitrators have an extensive background in the industry. The parties to an arbitration are referred to as the claimant (you) and respondent (the broker you’re accusing). A FINRA arbitration is binding on all parties and generally precludes you from using the court system for the same issue later on.

For most investors, FINRA arbitration is the means by which any dispute with your broker, investment advisor, or the company they work for will need to be resolved, because most major brokerage firms now require their clients to sign a FINRA arbitration agreement when applying for a brokerage account. If you feel that you have been the victim of investment fraud or that your investment account has been mishandled, you will need to hire a securities lawyer to represent you and initiate the FINRA arbitration process. In Florida, attorney Todd A. Zuckerbrod is a top securities arbitration lawyer who has produced superior results for his clients in FINRA arbitrations.

The Arbitration Process

These are the steps to expect in the FINRA arbitration process:

• To initiate a FINRA arbitration, your lawyer will file your “statement of claim” and other required forms; FINRA will then serve your claim on the broker or financial advisor and their employer against whom your claim is being made. They will need to file an answer to your claim, which will typically consist of a denial of the charges you’ve made.

• FINRA will provide both sides with lists containing the names of both qualified public and non-public arbitrators, and a third list of those arbitrators, both public and private, who have qualified to serve as a chairperson. The attorneys will rank the arbitrators in order of preference and strike the names of those they find unacceptable. As the claimant, you may choose to only use public arbitrators. Based on the rankings of both sides, FINRA will choose a panel of three arbitrators.

• An Initial Prehearing Conference (IPHC) is then scheduled, which is a conference call by telephone conference among the arbitrators and the attorneys for both sides, in which they will establish a date and length for the arbitration hearing.

• After the IPHC, the discovery phase begins, where both sides exchange the documents and other evidence on which they are basing their claim or defense. This will give your lawyer the chance to get a look at all of your records, which may include some that you were never provided, such as the total of all the commissions the broker generated from your account.

• Each side will also need to provide a list of witnesses they intend to call, and copies of any exhibits they will produce at the hearing. These must be provided at least twenty days before the hearing is to take place.

• The arbitration hearing may take place at a FINRA office or other agreed upon place in the area where the disputed transactions occurred. You, through your attorney, will present your case, followed by the attorneys for the respondent. Similar to a court trial, both sides will be able to cross examine witnesses and make objections.

• You will receive the written decision of the arbitration panel within a very short period, usually one to two weeks. If the arbitrators have made an award in your favor, the respondent has to pay you within thirty days or they will forfeit their securities license.

This is a streamlined process that is often less time-consuming and stressful for you than using the courts. The attorney’s job is just as labor intensive and detailed as preparing a case for trial, so having a FINRA arbitration lawyer with many years of experience and a detailed knowledge of securities law and industry standards, along with access to credible expert witnesses such as forensic accountants, is essential.

Obtain a Skilled Legal Advocate for Your Florida FINRA Arbitration

When you have a complaint against a stockbroker or investment advisor, you will find the highly experienced legal representation you need by calling the law offices of FINRA regulator and securities attorney Todd A. Zuckerbrod in Boca Raton. Todd has over thirty years of experience in the industry and a record of achieving positive results for clients through the arbitration process, and is always up to date on securities regulations. He has relationships with the area’s most prestigious forensic accounting firms, who are available to provide expert testimony in support of your case. Call for a free consultation to learn more about the FINRA and investment arbitration process and how we can help. The sooner you call, the sooner you may be able to recover the money you have lost, so make the call today.