FINRA Arbitration

FINRA Arbitration Lawyer San Diego

FINRA attorneys focus on a specific area law guided and regulated by the Financial Industry Regulatory Authority http://www.finra.org. FINRA’s mission is to safeguard public investors against fraud and bad practices.

“FINRA works every day to ensure that:

• every investor receives the basic protections they deserve;
• anyone who sells a securities product has been tested, qualified and licensed;
• every securities product advertisement used is truthful, and not misleading;
• any securities product sold to an investor is suitable for that investor’s needs; and
• investors receive complete disclosure about the investment product before purchase.”

Investor related claims and securities disputes are subject to FINRA arbitration. FINRA has adopted a code of procedural rules to resolve investment disputes and stockbroker employment disputes outside the courts and in a more expedited fashion.

(1) Investment Disputes – Investor Related Securities Arbitration:

Investor related securities arbitration cases are eligible to be heard in FINRA’s forum if the following criteria are met: (1) the cases involve an investor and an individual or entity registered with FINRA, such as cases between investors and brokers, between investors and brokerage firms, and between investors and brokers and brokerage firms; and (2) the claim is filed within 6 years from the time the events giving rise to the dispute occurred.

Generally investors have “consented” or otherwise “agreed” to arbitrate at FINRA in the initial documents when opening an investment account. Typical investor disputes which are subject to FINRA / Securities arbitration include:

• Recommending Unsuitable Investments: Most claims going against brokers are based on suitability arguments. Primarily, just because one investment is a great idea for one investor does not mean it is suitable for everyone. The risk tolerance of a 38-year old with no children has a different risk tolerance than a 65-year old retiree that has to draw from retirement savings. It is a “stock broker’s duty” to understand the clients’ needs and goals and make suitable investment decisions. If your broker is investing your money in solutions that do not suit your financial profile or investment goals, the broker is responsible for your losses.

• Excessive Trading or “Churning”: Brokers typically earn a living off commissions they earn when they buy or sell a security. Basically, the more a stockbroker buys and sells, the more money they can make for themselves. This creates an incentive that leads brokers to “churn” accounts quickly by buying and selling stocks in succession. If a broker is trading on your account for the purpose of maximizing commissions, this is FRAUD.

• Unauthorized Trading: A broker MUST get permission to trade stocks. They cannot simply buy a security without your authorization. Remember, stockbrokers make money on the commissions and they are incentivized to both buy and sell security on your behalf. If a broker is trading without consent, they are liable for the losses that result from those trades.

• Concentration: Don’t put all your eggs in to one basket; the saying applies with force in the investment world. Investors generally benefit from a diversified portfolio. If a stockbroker puts all your eggs in one basket, such as low-cap technology stocks, this is asking for trouble. Brokers who put all their clients’ money in energy stocks are at the mercy of the fluctuating price of oil. A broker who fails to diversify his client’s portfolio investments can be held liable for losses.

• Investor Claims that Fall within the Deadline to File. All broker misconduct cases are subject to statutes of limitations and legal deadlines.

(2) Stockbroker Employment Disputes:

Industry disputes or stockbroker employment arbitration cases are eligible to be heard in FINRA’s forum if the following criteria are met: (1) The cases involve an individual or entity registered with FINRA, such as cases between brokerage firms, between brokers, and between or among brokerage firms and brokers; and (2) the claim is filed within 6 years from the time the events giving rise to the dispute occurred.
Stockbrokers who have employment disputes with their firms typically must arbitrate in FINRA. Typical stockbroker employment disputes that are subject to FINRA arbitration include:

• Wrongful discharge
• Wrongful termination
• U5 Disputes
— U5 is the Uniform Termination Notice for Securities Industry Registration Broker-dealers, investment advisers, or issuers of securities must use this form to terminate the registration of an individual in the appropriate jurisdictions and/or self- regulatory organizations (“SROs”)
• Compensation Disputes
• Guaranteed Bonus Disputes
• Discretionary Bonus Disputes
• Promissory Notes Disputes

If you have fallen victim to broker misconduct and/or suffered a wrongful investment loss, we invite you to reach out to our offices today. Our experienced FINRA attorneys are ready to help with your pending disputes or arbitration matters. Please complete our online form or call today for a free consultation at 619-432-5145.