5 Ways FINRA Can Protect Investors
Get Your Free Consultation
As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
The Financial Industry Regulatory Authority (FINRA) writes rules and regulations for financial industry professionals and has numerous tools to try to prevent vulnerable investors from facing financial harm. In many cases, these tools work preemptively to keep investors safe. If they do not work, other protections work to right the wrongs and correct the harm an investor faced. If you or a loved one suffered fraud or financial negligence at the hands of a broker or financial advisor, contact the FINRA arbitration lawyers at Epperson and Greenidge today for a free consultation on your case.
FINRA Protections for Investors
There are plenty of protections that FINRA has in place to avoid financial negligence and help return lost money to injured investors. The following are 5 of the most important protections FINRA offers:
Licensing and Regulation
FINRA is responsible for creating regulations and licensing procedures for industry professionals. These regulations work to ensure that only properly trained and certified people have the authority to handle other peoples’ finances. Licensing requirements created by FINRA and the Securities and Exchange Commission (SEC) ensure licensing for all broker-dealers. That means that no one can touch your investments without having the proper training and licensure – an excellent defense against negligence.
One of the biggest protections FINRA offers is the ability to research your stockbroker or securities dealer before working with them. Through FINRA’s Broker Check, you can search for financial professionals and check whether they are properly certified. Brokers who are not licensed will not appear in the Broker Check system, which can be an early warning sign that your broker may be trying to take advantage of you with a Ponzi scheme or by making unauthorized trades on your accounts. If the broker has a history of financial negligence or prior complaints against them, those should also appear in FINRA’s records.
Broker Check also gives you a good picture of the broker’s background and experience. This can help you find a broker who is a good fit for your needs and investment goals.
Complaints and Sanctions
FINRA’s rules govern nearly all broker-dealers in the United States. If an investor was taken advantage of, they can issue a complaint to FINRA. FINRA then has the power to investigate the claim and order sanctions against the broker-dealer. These sanctions do not involve payments to the person who made the complaint, but they can work to punish negligent brokers by making them pay fines and fees or even suspending or revoking their license. Any of these complaints should be recorded in FINRA’s Broker Check to help potential investors see the issues with the broker before working with them.
If these protections fail, then you may have suffered financial harm by working with a broker-dealer that took advantage of you, omitted information about conflicts of interests, or pushed you into unsuitable investments. Sometimes, issues between you and your broker can be resolved by sitting down and discussing how they will set right the damages you faced. If you lost your investments or were forced to pay hidden fees, your broker should repay them.
FINRA mediation sets you up with an experienced mediator who can help you resolve issues between you and your broker. The mediator does not have the authority to order either party to do anything, but their decisions and recommendations might be enough to help your broker come to an agreement to pay you back for the harm you suffered. However, either party can walk away from mediation at any point, which makes it somewhat weak as a dispute resolution option.
FINRA arbitration is a more binding process that helps you recover compensation from the financial harm your broker and his/her brokerage firm caused you. Some harms may be taken to court and filed as a lawsuit. However, the deadlines for those harms might be shorter than FINRA’s filing deadline. In addition, since FINRA creates more rules and financial industry regulations than state or federal law, your case may involve clear harms that can only be addressed through FINRA arbitration. Further, most brokers and brokerage firms require that prospective clients sign an agreement than includes an arbitration clause – so arbitration may be your only option.
When you take your case to arbitration, it is assigned to an arbitrator or a panel of arbitrators who will hear your case. These arbitrators act like the judge and jury, hearing evidence and testimony about the harms you suffered. They ultimately decide what damages you should be entitled to, and they have the power to order your broker and his/her brokerage firm to pay damages.
Unlike mediation, these results are binding. FINRA uses its regulatory authority and licensing powers to ensure that brokers and their brokerage firms must comply with their procedures by appearing at hearings, cooperating with the process, and paying any damages the arbitrators order.
FINRA Arbitration Lawyers Offering Free Consultations
If you or a loved one was taken advantage of by a negligent securities broker or financial advisor, talk to the FINRA claims lawyers at Epperson and Greenidge today. Our attorneys offer free consultations to help you understand your claims and file them for arbitration with FINRA. For a free consultation on your case, contact our law offices today at (877) 445-9261.