Investments put in the hands of brokers and advisors aren’t always handled properly, and at times, poor investment strategies may result in substantial losses. Investments are naturally risky ventures. However, when losses are a result of fraudulent or negligent behavior, an investor should be able to access a cause of action against the broker or advisor that perpetrated the loss.
Seeking compensation for investment losses via the securities litigation procedure may be quite time-consuming and costly. Thus, most parties opt to seek redress via FINRA arbitration to resolve the dispute. By hiring a FINRA attorney to assist you in handling your case, they can acquire the required evidence and prove your case in court.
When you have suffered financial harm as a result of misconduct from the broker or financial advisor, here is what you need to know about FINRA and the FINRA arbitration process that you can use to recover your losses.
What Is FINRA?
FINRA is short for the Financial Industry Regulatory Authority, it’s an independent body that regulates brokerage firms and their brokers to protect investors from misconduct. FINRA operates under congress’s authority and isn’t a government agency; it ensures that investors are treated fairly and honestly.
Aside from drafting the regulations and ensuring they are complied with, FINRA regularly conducts an arbitration process. The majority of security disputes get resolved through this arbitration. Therefore, FINRA arbitration is final and binding; it is only subject to review through a court though minimal cases are allowed.
Filing Your Statement of Claim
The first step to make in the FINRA arbitration process is the filing of a statement of claim. When you file this statement, you are hereafter referred to as a claimant; you make the statement by providing all the alleged harm’s details. The statement includes the theory of liability, the individual and companies that cause the alleged damage, the relief you seek, and any other relevant data.
A competent FINRA attorney can take care of this part for you by ensuring all required steps are met. The party from which a claimant seeks relief is referred to as a respondent. As a claimant, you may request monetary compensation and interest for reparations to their misconduct.
Claimants also need to file a submission agreement then pay any required fees. Once you have filed your claim, the respondent will, in turn, file an answer that sets forths any facts they deem relevant and any defense they have to the lawsuit.
Selection of Arbitrators
Once the claim has been filed then answered, the two parties then decide arbitrators for their case from FINRA’s list. The number of damages alleged will determine whether a single arbitrator is enough or the case calls for a panel. Arbitrators will review the evidence outlined in the case, then ultimately give their decision.
To pick arbitrators, the claimant and respondents may opt to inspect the arbitrators’ resumes and their prior history to help them decide who to pick by striking out some. Finally, the two parties can rank arbitrators they did not strike out by order of preference then present their choices to FINRA.
Initial Pre-Hearing and Conference
Once an arbitrator has been appointed, FINRA goes ahead to schedule an initial pre-hearing Conference. A pre-hearing conference is conducted over the phone. During the meeting, the arbitrators schedule relevant deadlines and dates regarding the claim. The conversation includes giving the discovery deadlines and hearing deadlines.
Depending on the matter at hand, the parties may also discuss preliminary issues. During the discovery period, your FINRA attorney helps you seek and gather evidence from the respondents to build up and support your claim. At this point, you may also be required to submit some pieces of information such as financial statements, tax returns, documented communication between you and the respondent, and more.
Hearing and Decision
Once the discovery is completed, an arbitration hearing is held if the parties haven’t yet resolved independently. During the hearing, each party presents their evidence, including witnesses, to support their position. The majority of the hearings take just a few days; more complex cases may take a couple of weeks. Finally, the arbitrator or the arbitration panel renders a decision within 30 days of the hearing.
FINRA managed to create a forum for investors facing losses from misconduct to file private arbitration dispute resolution. The process is a much quicker, cost-effective alternative compared to having a proceeding through the federal courts. The FINRA process may feel a little intimidating when trying to figure out all the procedures and rules on your own; this is why you should consider placing your case in the hands of a FINRA attorney. The attorney will find out what is relevant, what more information to get as evidence, and guide you through the arbitration procedure.