Are You Eligible to File for FINRA Arbitration?


If you have suffered sudden and unexpected losses in your brokerage account, it is worth investigating whether your losses may be the result of investment fraud. Investment fraud is far more common than most investors would like to believe, and each year numerous investors recover their fraudulent losses through arbitration with the Financial Industry Regulatory Authority (FINRA).

If you believe that your investment losses may be due to fraud, it is important to determine whether you are eligible (or perhaps even required) to pursue compensation through FINRA arbitration. Although arbitration is a structured process, it involves numerous benefits and efficiencies that typically make it an attractive alternative to seeking legal remedies in court.

When is FINRA Arbitration an Option?

For individual investors, there are two main criteria in order to be eligible for FINRA arbitration. The first has to do with the types of cases that are eligible for arbitration, while the second is a strict deadline (or “statute of limitations”) for filing FINRA arbitration claims. In order to be eligible for FINRA arbitration, you must:

  • Have a claim for fraudulent investment losses against a broker or brokerage firm that is registered with FINRA; and,
  • File your claim within six years of the date on which your losses occur.

Generally speaking, FINRA registration is a requirement for brokers and brokerage firms offering investments to individual investors in the United States. While establishing exactly when investment losses occur can often be a challenge, an experienced investment fraud attorney will be able to investigate to determine whether you are still within the time window to file for FINRA arbitration.

When is FINRA Arbitration Required?

In many cases, individual investors will not only be eligible for FINRA arbitration, but they will be required to file for arbitration in order to recover their investment losses (unless both parties agree to mediation). Pursuant to FINRA’s regulations, investors are required to arbitrate investment fraud claims if:

  • Their brokerage agreement requires arbitration;
  • Their broker or brokerage firm is registered with FINRA; and,
  • The fraud claim arises out of the broker’s or brokerage firm’s securities business.

FINRA’s regulations require all registered brokers and brokerage firms to submit to arbitration when their clients file fraud-based claims.

Do I Need an Attorney to File for FINRA Arbitration?

While not a legal requirement, it is strongly in individual investors’ best interests to hire an attorney to represent them in FINRA arbitration. The process is complicated, and it takes experience to conduct discovery, question expert witnesses, and build a comprehensive case strategy designed to secure a favorable arbitration award. Investors who do not seek legal representation put themselves at a disadvantage, and by doing so they put themselves in jeopardy for losing the ability to enforce their legal rights.

Should You File for FINRA Arbitration? Speak with an Attorney for Free

For more information about the FINRA arbitration process and the benefits of hiring an attorney for your investment fraud arbitration claim, contact Zamansky LLC for a free, no-obligation consultation. Call us 24/7 at (212) 742-1414, or submit your information online and we will get in touch as soon as possible.