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The Basics of FINRA Dispute Resolution – What Investors Should Know

May 26, 2015 Blog

For investors who suffer stock market losses as a result of improper conduct by their brokers, the Financial Industry Regulatory Authority (FINRA) arbitration process provides a relatively efficient method for seeking financial compensation. FINRA is an independent non-profit organization that Congress has tasked with regulating the U.S. securities industry. Its authority covers more than 4,000 securities firms and 600,000 individual brokers.

About the FINRA Arbitration Process

The arbitration process starts with filing a Statement of Claim with FINRA and paying the applicable filing fee.  An experienced securities attorney will be able to help you determine your causes of action and prepare a comprehensive Statement of Claim. Depending on the amount of your losses, FINRA will typically appoint three arbitrators to hear your case.

It is important to note that FINRA’s arbitration guidelines require investors to submit a Statement of Claim within six years of the date on which the claim arises. If you do not file in time, FINRA will not hear your case – and you can still be prohibited from filing a lawsuit in court. Since it can be difficult to determine exactly when stock market losses occur, we recommend contacting an attorney as soon as you discover your losses.

Once you file your Statement of Claim, your broker and their securities firm will file a response.

Next are the initial prehearing conference and the process known as discovery. Attorneys for both sides must participate in the conference, which is when the arbitrators will set a date for your hearing – typically about nine months later. In the meantime, both sides will be required to disclose certain documents as mandated by the FINRA regulations applicable to your specific claims. These documents typically include:

  • Trading histories
  • Tax returns
  • Financial statements
  • Account records
  • Evidence of the broker’s or firm’s improper conduct

Finally, there is the arbitration hearing. The hearing follows the same general procedures as civil litigation involving securities disputes. Your attorney will present evidence to support your claims, and the attorney for the defense will try to produce contrary evidence suggesting that you are not entitled to compensation for your losses. In the end, the arbitration panel will issue a binding decision in favor of one side or the other on each of your claims.

What if I Win in FINRA Arbitration? What if I Lose?

If the arbitration panel rules in your favor, the securities firm or broker is required to pay you within 30 days. If they fail to do so, FINRA can suspend them from further market activity.

If you lose, the panel’s decision is generally final. Unlike judgments in civil court, there are limited prospects for appeal, except in certain specific circumstances.

Contact a FINRA Arbitration Attorney at Zamansky LLC

The attorneys at Zamansky LLC represent individuals who have suffered stock market losses at the hands of their securities firms and brokers. We have decades of experience representing clients in FINRA arbitration. To speak with an attorney about your stock market losses, contact us today.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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