What is FINRA?

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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
  • Negligence
  • Failure to Supervise
  • Fraud/Misrepresentation
  • Unauthorized Trading
  • Churning/Excessive Trading
  • Unsuitable Transactions

The following types of investments can also end up in FINRA arbitrations:

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

Why You Need a FINRA Lawyer

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.

FINRA Arbitration Process

1. 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 New York FINRA 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.

2. 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.

3. Discovery

During the discovery process, our FINRA lawyers in New York 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.

4. 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.

How Long Does FINRA Arbitration Take?

According to FINRA, the arbitration process typically takes a little over a year. However, the actual duration of an FINRA arbitration claim varies based on several factors.

Factors that may influence how long your FINRA claim may take:

  • Complexity of the Case: More intricate cases may require longer periods for gathering evidence, presenting arguments, and deliberations.
  • Cooperation and Settlement: If parties are open to negotiation and reach a settlement early on, the arbitration process can be expedited. A skilled FINRA attorney in New York can guide you through this.
  • Discovery Phase: This phase involves collecting evidence and information relevant to the case. Depending on the extent of discovery needed, this phase can lengthen the process.
  • Arbitrator Availability

At Weltz Law, your trusted New York FINRA Lawyer understands the importance of knowing what to expect in the FINRA arbitration process. While the typical duration of a FINRA claim can vary, having a skilled legal partner by your side can expedite the process and provide you with the confidence to navigate every step efficiently. Contact us for your free consultation and to benefit from our seasoned expertise in FINRA claims.

Meet With a Skilled New York FINRA Lawyer At Weltz Law

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 by contacting us today. We serve clients in New York and throughout the United States.

If you’re ready to speak to a member of our legal team, then please give us a call today at (877) 905-7671 to set up a free case consultation.


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