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When Investors Should Consider a FINRA Arbitration Lawyer

— November 2, 2021

Investors such as yourself ought to consider hiring a FINRA arbitration attorney if you have lost money due fraud or mismanagement by either a financial institution or a brokerage firm.

Investing is a strong way to improve one’s financial well-being in this world. Typically it starts with investors managing their own investment portfolios and over time when the investment amounts become significantly high, it is very common for investors to turn to the professionals: financial advisors and stockbrokers.

In most cases, this is a financially positive relationship that yields good financial gains that improve your life. Unfortunately this is not always the case, and sometimes due to either fraud, negligence or mismanagement, you may find yourself with a huge amount of investment loss.

In such cases, one of the major decisions you need to make is whether you will face the circumstances on your own or if you will seek out the services of a FINRA arbitration lawyer.

Learn what FINRA and arbitration are. Discover the situations where a FINRA arbitration lawyer can help you recover your financial losses. Find out the reasons why you should hire an attorney to represent you during FINRA arbitration cases.

What Is FINRA?

FINRA stands for Financial Industry Regulatory Authority. It is classified as a self-regulatory organization (SRO) in the U.S.

This SRO was given authority by the Securities and Exchange Commission (SEC) to oversee registered brokers, broker-dealer firms, and market transactions in the nation.

Brokers are required to register with FINRA to be qualified to trade securities with the public. The BrokerCheck tool confirms if a broker is registered with the SRO or not.

Business Insider quotes Gerri Walsh, senior vice president of Investor Education at FINRA: “Our whole mission is investor protection and market integrity.”

FINRA upholds ethical investment practices among registered brokers. It promotes market security by preventing or minimizing fraud or manipulation.

What is FINRA Arbitration?

Arbitration is one of the main alternative dispute resolution (ADR) methods.

It is a formal alternative to courtroom litigation. It involves two or more parties who choose a neutral third party known as an arbitrator to resolve a dispute. In some instances, a panel of three arbitrators is assigned to a case.

Arbitration is more efficient and affordable in comparison to courtroom litigation. Courtroom litigation can be time-consuming and expensive because of the compliance requirements related to court rules and pretrial discovery procedures like examinations, depositions, and interrogatories.

The arbitration process typically entails the following steps:

  • The FINRA arbitrator listens to the arguments presented by both parties.
  • The arbitrator evaluates and analyzes the documentary evidence or testimonials.
  • The FINRA arbitrator makes a decision, also commonly known as an award.
  • Both parties are required to abide by the award, which is considered final and binding.

At present, FINRA does not offer an appeals process that enables a party to challenge an award. Nevertheless, there is a limited provision under state and federal laws that allows a party to present a motion to vacate an award at court.

Take note that the size of the claim will influence the flow of the arbitration procedure:

  • Claims Above $100,000: Claims that exceed $100,000 necessitates an in-person hearing with a panel of three arbitrators.
  • Claims Below $100,000: Claims that are less than $100,000 only require a single arbitrator under one of these conditions:
    • Standard arbitration hearing: The evidence is presented in person
    • Phone arbitration hearing: This includes most of the elements of a regular hearing
    • “Paper” hearing: The arbitrator makes an award using the submitted documents as a basis for the decision

Situations Where a FINRA Arbitration Lawyer Can Help You

You have probably entered an account opening agreement or a self-regulatory organization membership agreement if you are an investor.

A FINRA arbitration lawyer can assist you to resolve disputes with stock or commodities brokerage firms in an arbitration forum including:

  • Financial Industry Regulatory Authority (FINRA)
  • American Arbitration Association (AAA)
  • Judicial Arbitration and Mediation Services (JAMS)
  • National Futures Association (NFA)

Reasons Why Investors Should Consider Hiring a FINRA Arbitration Lawyer

Investors such as yourself ought to consider hiring a FINRA arbitration attorney if you have lost money due fraud or mismanagement by either a financial institution or a brokerage firm.

Man looking at financial information on smartphone; image by Rawpixel, via
Man looking at financial information on smartphone; image by Rawpixel, via

According to FINRA resources, these are the major reasons why it is a practical choice to let a lawyer represent you during the arbitration process:

  • Professional Discernment: An attorney can help you discern if you have a viable claim for arbitration even before the arbitration procedures starts. This is important because it prevents you from spending time or resources if your case is not promising enough from the get-go.
  • Expert Assistance: A lawyer who specializes in FINRA arbitration is more familiar with the proceedings compared to you. He or she can present your case in a superior way to the arbitrators than you can do so on your own.
  • Legal Guidance: An attorney can handle complicated regulatory and legal issues and huge claims for monetary damages that go beyond simple arbitration matters.
  • Arbitrator Selection: A lawyer can help you choose which arbitrators are suitable for your case. FINRA creates identical randomly generated lists of proposed arbitrators to both parties. This list includes a detailed report on the background of the arbitrators.
  • Objective Representation: An attorney can function as a level-headed third-party representative, especially if you tend to get emotional about the case. He or she can give you objective legal advice that will keep you on track towards reaching your goals.
  • Privacy and Confidentiality: The attorney-client privilege protects your privacy. It prevents your lawyer from discussing and divulging the matters that you shared with him or her regarding the case. This privilege gives you and your attorney the chance to evaluate the strengths and weaknesses of your case together in an atmosphere of trust and confidentiality.

Consider Talking with a FINRA Arbitration Lawyer

You probably now realize the advantages of hiring a FINRA arbitration lawyer who can expertly manage your arbitration cases. However, you may not be sure where to find an attorney who can assist you with your arbitration needs.

When looking to hire an attorney, we recommend looking for a lawyer with previous experience handling arbitrations that involve securities broker-dealers who are members or associate members of FINRA.

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