What Is FINRA?
Experienced & Effective Securities Lawyers Serving Clients Nationwide
The Financial Industry Regulatory Authority, Inc. (FINRA) is a private, non-governmental organization that regulates brokers and brokerage firms in the United States. Virtually all disputes between investors and their stockbrokers are decided in the arbitration forum operated by FINRA. FINRA is not a government agency but instead operates under the authority of Congress to make sure that investors are treated honestly and fairly.
Investor rights groups have historically been critical of the FINRA arbitration forum, viewing it merely as an extension of the securities industry itself and as being biased against investors. However, over the years, FINRA has made changes to the arbitration process that have served to level the playing field between investors and investment professionals. In our experience, the vast majority of FINRA arbitrators use their common sense to reach fair results. Regardless, a FINRA arbitration is final and binding, and it is subject to court review only in very limited instances.
Common FINRA Claims
Some common claims in FINRA arbitrations include:
- Breach of Contract
- Failure to Supervise
- Unauthorized Trading
- Churning/Excessive Trading
- Unsuitable Transactions
The following types of investments can also end up in FINRA arbitrations:
- Limited Partnerships
- Variable Annuities
- Private Equities
- Alternative Products
- Structured Products
Why You Need a FINRA Attorney
At Weltz Law, we understand that investments are not always handled properly, and poor investment strategies can result in substantial losses. While there is risk in any investment, when losses are caused by negligent or fraudulent behavior, the investor may have a cause of action against the broker or financial advisor who caused the loss.
Seeking compensation for losses through securities litigation can be costly and time-consuming. Thus, in many cases, the parties will choose to proceed to FINRA arbitration to resolve their dispute.
If you suffered financial harm because of the negligent or fraudulent acts of a broker or financial advisor, then a FINRA arbitration lawyer can assist you in seeking recourse for your harm. Our firm has 50 years of combined experience assisting clients in FINRA arbitration and securities litigation, and will gladly take a look at your case and explain all of your options under the law.
Filing a Statement of Claim
The first step of the FINRA arbitration process involves filing a Statement of Claim. The party who files the Statement of Claim should set forth the details of the alleged harm, including the theory of liability, the people and companies that caused the alleged harm, any relevant dates, and the relief sought. Our FINRA arbitration attorneys can make sure that each of these steps is taken.
The party from which the claimant is seeking relief is called the respondent. A claimant can request monetary compensation, the performance of a contract, and interest. The claimant must also file a Submission Agreement and pay any fees. Once a Statement of Claim is filed, the respondent will file an answer, setting forth any relevant facts and defenses to the claim.
Selecting Arbitrators & Initial Prehearing Conference
After the Claim is filed and answered, the parties will select arbitrators from a list developed by FINRA. Whether one arbitrator or a panel of three arbitrators will decide the case depends on the number of damages alleged. The arbitrators will review the evidence in the case and ultimately issue a decision. The claimant and the respondent can review the resumes and prior awards of the arbitrators selected and can strike arbitrators from the list.
FINRA arbitrators come from all walks of life, including lawyers, accountants, teachers, journalists, business owners, engineers and psychologists, and geographical locations that are based on the investor’s residence. The parties will then rank arbitrators who were not stricken from the list in their order of preference and submit the choices to FINRA.
After an arbitrator or panel is appointed, FINRA will schedule an Initial Prehearing Conference. During the conference, which is usually conducted over the phone, the arbitrators will schedule the relevant dates and deadlines for the matter, including the hearing date and discovery deadlines, and they can discuss other preliminary issues.
During the discovery process, our FINRA arbitration attorneys can help you seek evidence from the other parties to the arbitration to support your claim. Meanwhile, you may be required to produce certain information and documents, such as tax returns, financial statements, and documentation of your communications with your broker or financial advisor.
Hearing & Decision
If discovery is completed and the parties are not able to come to a resolution independently, then an arbitration hearing will be held, and each party will present evidence and witnesses in support of their position, similar to a trial. Most hearings last a few days, but in complex cases, they may take weeks. Within 30 days of the conclusion of the hearing, the arbitrator or the panel will render a decision.
Meet with One of Our Skilled Securities Attorneys Today
At Weltz Law, our philosophy is that you must be prepared to take every case to trial. While settling early may be appropriate in certain cases for a variety of reasons, we believe that higher recoveries are obtainable when your lawyer demonstrates an ability and willingness to go to the mat. If you have sustained losses due to investments made through a broker or financial advisor, it is essential to meet with a skilled securities attorney to discuss whether FINRA arbitration is a good option for seeking damages for your harm.
Our firm has helped investors throughout the nation recover millions of dollars in compensation for losses caused by the fraudulent or negligent acts of brokers and financial advisors. Let our legal team help you make the most of your case and get you the best possible recovery. We serve clients in New York and throughout the United States.
30+ Years of Collective Experience
Our attorneys have over 30 years of collective experience representing clients in all aspects of securities and commercial litigation.
Contingency Fees for Our Securities Law Clients
We will not receive a penny in attorney's fees unless a positive recovery is obtained in your case. Contact us to see if you're eligible.
We will assess the merits of your claims and help you decide on the next step.
Litigated Claims in Excess of $50 Million for Our Clients
Our firm has successfully recovered over $50 million for our clients.