Reasonable-Basis Suitability

What Is FINRA?

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.

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 the investor and investment professionals. In our experience, the vast majority of FINRA arbitrators use their common sense to reach fair results.


Some common claims in FINRA arbitrations include:

  • Unsuitable Transactions
  • Churning/Excessive Trading
  • Unauthorized Trading
  • Fraud/Misrepresentation
  • Breach of Fiduciary Duty
  • Negligence
  • Breach of Contract
  • Failure to Supervise

Some common investments in FINRA arbitrations include:

  • Stocks
  • Bonds
  • REITs
  • ETFs
  • Options
  • Limited Partnerships
  • Private Equities
  • Variable Annuities
  • Annuities
  • Structured Products
  • Alternative Products

Depending on the size of your claim, your dispute will be heard by either one or three arbitrators. The investor and the investment professional are entitled to select the arbitrators who will hear their case through the FINRA list selection process. 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 most recently available statistics released by FINRA for 2018 suggest that it takes approximately 16 months to get a decision from the arbitrators and only approximately 17% of the cases were actually decided upon by the arbitrators. In fact, 83% of FINRA arbitrations were resolved by others means and 67% were settled directly between the parties or via mediation. What this means is that the vast majority of FINRA arbitrations are settled before the hearing of the case by the arbitrators (which in court-speak means before trial).

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.

Let Weltz Law help you make the most of your case and get you the best possible recovery.

Suitability Supervision?

Contact Us For A Free Case Evaluation

We will assess the merits of your claims and, where appropriate, will take your case on a contingency fee basis, i.e., we will not receive a penny in attorney’s fees unless a positive recovery is obtained in your case.