What to Expect in a FINRA Arbitration Process



Most individuals who invested in the stock market this past year experienced unparalleled success and high growth in their portfolio. In fact, stocks, as measured by the S&P 500, grew a stunning 28 percent.

There were some people, however, who were not so fortunate, often due to no fault of their own.  Instead of reaping the benefits of the booming market, many sustained losses as a result of poor investment guidance, financial adviser fraud, broker deception, excessive management fees, or other unethical behavior on the part of a financial advisor.

If you, or someone you know, has suffered these types of shortfalls, it is natural to be angry or even embarrassed. After all, you were just trying to improve your life and protect the financial future for generations to come.

Under these circumstances, you may be able to take legal action against your financial advisor to regain your losses.

Why Choose FINRA Arbitration?

Although you may have the right to face your broker in a formal court hearing, arbitration through the Financial Industry Regulatory Authority (FINRA) is often a preferred alternative to litigation. Sometimes, you may have no other choice to arbitrate if the broker included an enforceable arbitration provision in your account agreement. 

Arbitration is a non-judicial proceeding that is typically faster and lower cost than taking the claim in front of a judge. Specifically, FINRA arbitration allows a person to attempt to recover stock trading losses in a neutral venue where investors present their disputes against their financial counselors.

Some of the most common reasons investors enter into FINRA Arbitration include:

  • Failing to fully disclose the risks of a particular investment 
  • Negligence for bad financial advice
  • Failing to recommend an investment that makes sense for the individual
  • Unauthorized trading and failure to obtain approval from the investor 

Regardless of the situation leading to a FINRA arbitration, taking action against a broker or brokerage firm can quickly become complicated. There are deadlines, documents to be filed, and countless details. 

For these reasons and more, you should not enter FINRA arbitration on your own. It is important to work with a knowledgeable and reputable attorney who understands the investment and securities landscape.

How FINRA Arbitration Can Help Investors

FINRA is a government-authorized not-for-profit organization dedicated to protecting investors and is responsible for assuring that securities-related disputes are handled in a truthful, trustworthy, and effective manner.

For investors who have suffered losses from a broker’s misconduct, it may be possible to recover stock trading losses in a process called FINRA arbitration. FINRA is a neutral venue where investors litigate their disputes with their financial counselors.

6 Steps of FINRA Arbitration 

When you have a complaint about an investment dispute with your broker, you should immediately contact an attorney to determine if you should begin a FINRA arbitration. This process, however, can quickly become complex and overwhelming. As a result, working with an attorney with expertise in securities and finance is important. 

Here are six basic steps of how the FINRA arbitration process unfolds:

  1. Filing: The First Step

The process begins when a Statement of Claim is filed with the FINRA Dispute Resolution department and a filing fee is paid. This Statement includes the facts of the case, the parties involved, and the resolution requested. Fees usually range from $50 to $1,500, depending on the amount in dispute.

  1. Claim Response 

After the filing, FINRA serves the Statement of Claim on the other parties. Each side has 45 days to file a response to the case with the relevant facts and defenses.

  1. Who Hears the Arbitration?

You may wonder if you have any input regarding who decides your case. FINRA uses an unbiased procedure (computer algorithm) to randomly generate a qualified list of potential arbitrators. Typically, a panel is made up of three arbitrators who are knowledgeable in the area of securities such as attorneys, retired judges, and industry professionals. FINRA assures that there are no conflicts of interest with prospective panelists, such as personal favoritism, current employment by one of the parties, or other issues.

Each side is presented with lists of prospective arbitrators and allowed a limited number of dismissals. The panel is then set and ready to hear the claim. It’s important to understand that FINRA is not there to help the investor, rather, their role is to be impartial.

  1. Sharing of Information

All parties are entitled to “discovery.” Discovery is the sharing of documents prior to the actual arbitration. These include, but not limited to:

  • tax returns for relevant years
  • trading confirmations
  • correspondence, including emails, texts, and more
  1. The Hearing Procedure

The location of the hearing typically takes place where the investor resided when the issue took place. During the hearing phase, the arbitrators listen to opening statements; examination of witnesses, evidence, and closing arguments. 

  1. The Decision and Financial Award

One of the most important aspects of arbitration is that the decisions are final and binding. If damages are awarded, they must be paid within thirty days of receiving written notice, unless the respondent files a motion to appeal. 

Getting Started and Taking the First Step

You can now better understand the vast amount of effort involved in FINRA arbitration.  But that does not mean you should not attempt to recoup your losses. 

If you have suffered from your financial advisor’s wrongful or dishonest acts and decide to sue your financial advisor for losses, an experienced investment attorney can help you navigate the complicated FINRA arbitration process

Understanding securities law and the applicable rules and regulations is complicated. To ensure you have the best chance at a favorable outcome, choose a skilled local securities attorney in St. Louis who will prepare you for the proceedings and protect your interests.

When you suspect misconduct on the part of your investment professional, contact the attorneys at Ross & Voytas, LLC. They are committed to assisting you with seeking to recover for your losses. 

The attorneys at Ross & Voytas can assist you with various investment issues.

Ross & Voytas is located in St. Louis, Missouri

Attorneys, Nate Ross and Rick Voytas, have educational backgrounds that help in investment disputes. Nate Ross graduated magna cum laude with a bachelor of arts degree from Westminster College with an emphasis in business administration before obtaining his Law degree in 2001. In addition to earning his Law degree in 2002, attorney Rick Voytas earned a master’s degree in Finance in 2007 and is a published author in the field of securities arbitration. His article in the respected publication Securities Arbitration Commentator (SAC) was one of the first to explore and analyze situations where brokers and brokerage firms were likely to prevail over ordinary investors. 

These backgrounds allow the attorneys at Ross & Voytas to combine academic knowledge with practical trial skills obtained through litigating high-stakes disputes. The result is service that enables clients to achieve the best odds for a successful outcome in a FINRA arbitration.

The attorneys at Ross & Voytas bring more than thirty years of combined courtroom and litigation experience to support your rights. They have multiple 5-star reviews and attorney, Rick Voytas, has earned the prestigious Martindale-Hubbell AV Rating, awarded to those lawyers with the highest ethical standards and professional ability. 

Don’t delay! Contact the professional attorneys at Ross & Voytas now for your legal needs at 314-394-0605 or learn more at www.rossvoytas.com.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship. The choice of a lawyer is an important decision and should not be based solely upon advertisements. Past results afford no guarantee of future results; every case is different and must be judged on its own merits. Neither the Supreme Court of Missouri, nor The Missouri Bar reviews or approves certifying organizations or specialist designations. The Supreme Court of Illinois does not recognize certifications of specialties in the practice of law. Images on this site include simulated portrayals of lawyers, clients, victims, scenes and events.

*The choice of a lawyer is an important decision that should not be based solely upon advertisements.

*The choice of a lawyer is an important decision that should not be based solely upon advertisements.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. Contacting us does not create an attorney-client relationship. The choice of a lawyer is an important decision and should not be based solely upon advertisements. Past results afford no guarantee of future results; every case is different and must be judged on its own merits. Neither the Supreme Court of Missouri, nor The Missouri Bar reviews or approves certifying organizations or specialist designations. The Supreme Court of Illinois does not recognize certifications of specialties in the practice of law. Images on this site include simulated portrayals of lawyers, clients, victims, scenes and events.

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