What to Expect in FINRA Arbitration

Suffering investment losses from fraud, dishonesty, or other unethical behavior on the part of a financial advisor or securities firm can be devastating. There are feelings of embarrassment, anger, and betrayal, as well as a fear of the future. You might be wondering if you can regain your losses, and if so, what the process will look like.

FINRA, the Financial Industry Regulation Authority, is a non-profit organization that exists to help protect individual investors like yourself. For investors who have suffered losses from a broker’s misconduct, it may be possible to recover losses in a process called FINRA arbitration. FINRA arbitration is where investors and brokers go to settle disputes – like a court. Even if you trust your current broker, it’s important to understand how the process of FINRA arbitration works in case you should ever need to go through it to recover losses.

FINRA is a venue, it’s like a court. It runs a program, it’s not actually working out the disputes, it’s just the place that disputes happen.  It is a neutral venue where investors are required to litigate their disputes with brokers and brokerage firms.

How FINRA Arbitration Works

If you have a complaint about misconduct or an investment dispute with your broker, after hiring an attorney, the FINRA arbitration process is started by filing a claim statement with its Dispute Resolution department. There are a variety of different forms of misconduct or fraud you may encounter that could lead you to file a claim. An investor’s first step in restitution is filing an FINRA arbitration claim. Examples of common FINRA arbitration claims include:

The arbitration panel reviews pleadings, arguments, and testimonial evidence. Its decision (“award”) is final and binding to all parties. A party may challenge the award in court within the statutorily provided time based on very limited grounds. It’s important to understand that, during a FINRA arbitration, FINRA is not there to help the investor, rather, their role is to be neutral – like a clerk of a local court and to administer the arbitration proceeding.

If you have suffered losses from your financial advisor’s wrongful or dishonest activities, an experienced investment loss attorney can help you navigate the FINRA arbitration process for a more successful resolution. If you have more questions, visit our securities fraud frequently asked questions page, or contact our firm to speak with one of our qualified attorneys.