As an investor, you depend on your broker or brokerage firm to put your interests first when handling your investments. After all, that is why you chose them, because they are supposed to be experts in the field of investing your money wisely. But what happens when they fail you? What happens when they put their interests over yours? What happens if instead of your financial gain, they use your money to their own benefit instead of yours? Or, if they are negligent in making recommendations that are not in your best interests or are unsuitable for you?

The answer is that you should complain about this conduct and seek damages.  

If You Have a Brokerage Account, Most Likely You Agreed to FINRA Arbitration 

Most brokerage firm contracts have a clause requiring that all disputes with customers be handled through FINRA arbitration. Notwithstanding this, all brokers and firms who are FINRA members are required to arbitrate their customer’s claims through their forum. So, most likely, any dispute you have with your broker or firm will be handled in a securities arbitration proceeding before FINRA. Accordingly, you would be wise to consult with a securities arbitration attorney familiar with the FINRA rules and processes to assist you in that process. 

In this article, we will discuss the securities arbitration process, and what an attorney’s role in that process. If, after reading this blog, you have additional questions or feel that you may have a claim, we invite you to contact Former Wall Street attorney Melanie Cherdack. Ms. Cherdack is a securities arbitration attorney who understands the plight of those who were victims of investment fraud. She has represented hundreds of investors and has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients. We invite you to contact us today on our online contact form, or by calling 888-768-2499.

The Importance of FINRA

The purpose of the Financial Industry Regulatory Authority, or “FINRA,” is to protect investors, regulate brokers, and guarantee integrity in all stages of the investment process. FINRA provides investors with protections and avenues for recouping lost dollars when brokers are negligent, break the rules, or cheat investors.

FINRA provides the forum of securities arbitration for those wronged by brokers. It is a process that is faster than filing a lawsuit, geared towards the issues that investors have with brokers and is private. Laws and regulations governing these issues can be complex, and you will need to prepare your case, file documents, meet deadlines, know which issues are paramount to your case, figure out how to show they breached a contract or violated rules and regulations or any other numerous issues. That is why you need a good attorney to help you through the securities arbitration process.    

Your Attorney’s Help During Arbitration

Although you are not required to hire an attorney for securities arbitration, it is in your best interest to do so. There are numerous benefits to having an attorney assist you. Even the FINRA website suggests hiring an attorney, as follows:  

You should consider hiring an attorney to represent you during the arbitration proceedings to provide direction and advice.”  

FINRA’s website goes on to state that the brokerage firm will most likely have an attorney representing them. You do not want to be at a disadvantage in a securities arbitration, and the best way to keep the playing field even is to hire a good attorney.

Overall, it is important to have an experienced attorney with you during the entire process. A good attorney will have represented clients before FINRA many times, and that experience is invaluable as you navigate the arbitration process. 

1. Before Filing a Claim

First, you will most likely need advice on whether your broker’s actions are an actual violation of the rules or the  law, or if you were wronged in a way that violates FINRA’s regulations. These regulations can be complex to decipher.  

It takes expertise to see if the broker’s actions are actual violations that can be proven to an arbitrator. Since there are numerous rules, laws and regulations, as well as varied scenarios of violating them, it takes a skilled attorney to determine which ones are ripe and viable for securities arbitration

It is most certainly a good idea to discuss your case with an attorney before you make the decision to bring your case to arbitration. Securities is a complicated and wide-ranging field of law, and as an investor, you don’t want to miss any claims you have against the broker.  

2. Filing a Claim

Next, you will need to navigate the process of filing your claim. That means filing specific documents and meeting deadlines for various required document filings. You may not realize that filing your Statement of Claim is one of the most important things you need to do properly. This doesn’t just mean filling out the paperwork per the FINRA guidelines, but the actual claims and allegations in the Statement of Claim all need to be made and made properly.  You will also need to determine what legal claims to make and how much in damages you seek to have awarded to you when you file your claim, and an attorney will help you with that as well. 

3. Deadlines and Discovery 

There are important deadlines in Securities Arbitration and missing a deadline could be devastating to any claim you have. You want the process to be as smooth and seamless as possible. In the discovery process, you have to provide certain information to the Respondent brokerage firm, and there are rules on what information they can request from you and what you are required to provide, as well as deadlines you must meet to provide that information. Some information is privileged and you don’t have to disclose it. It is helpful to have an attorney to help you navigate through this process. 

4. Choosing an Arbitrator

You may not realize that you are able to choose your arbitrator or arbitrators from a list that is provided to you during the Securities Arbitration process. You may not have the knowledge an experienced attorney has about the different arbitrators that will best understand a specific case.  

5. The Hearing

A hearing is held before the arbitrator or arbitrators where you will present your case. The brokers will have attorneys representing them at the hearing. You will need to prepare your case and your testimony prior to the hearing.  

A securities attorney will help you with this. Preparation is key from the start of the case through the final stages. It is helpful to have someone experienced and trusted with you to help you prepare for the hearing. 

6. Award after the Hearing

After the hearing, the arbitrators consider all evidence before them and make a binding decision known as an award. This decision is final. That is why you want them to award you what you requested, which is best achieved through expertise and preparation from the start of your claim to the end.

Altogether, the Securities Arbitration process is complex, and while an attorney is not required to file a claim with FINRA, it is in your best interest to do so.

Consider Melanie S. Cherdack to Represent You in Your Securities Arbitration.

If you have lost money due to broker fraud or simple broker negligence, it is crucial to hire a lawyer who fully understands this area of law. Former Wall Street securities attorney Melanie S. Cherdack represents individual and institutional investors who are unwitting victims of investment fraud and broker negligence. She heads up a group of attorneys who represent investors across the United States. Contact us by filling out our online contact form, or calling 888-768-2499.