What Types of Cases Are Eligible for FINRA Arbitration?
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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) is a multistate body authorized by Congress to regulate the financial industry. They write rules and ethics codes for finance professionals, including stock brokers and financial advisors. If any professional or business entity registered with FINRA becomes part of a dispute with another FINRA professional or an investor/client, that case could go before a FINRA forum for arbitration. The FINRA arbitration attorneys at Epperson & Greenidge explain what types of cases are eligible for review by FINRA.
What Cases Qualify for FINRA Arbitration?
Taking a dispute to FINRA can provide an investor who has been mistreated or scammed with a path to compensation. It can also end with punishments levied against an irresponsible or underhanded broker or financial advisor.
Arbitration through FINRA is very similar to taking the broker or advisor to court. Instead of a judge and jury, there will be an arbiter or a small group of arbiters. They will hear the case, hear evidence, and try to determine the just outcome. They will use FINRA rules and applicable law to decide whether or not the financial professional’s conduct was below the standards for their profession or otherwise constituted a scam, fraud, mishandling of funds, or some other problem.
To qualify for arbitration through FINRA, the case must involve at least one professional registered with FINRA. Nearly every broker or securities dealer in the United States is required to register with FINRA. Since FINRA is responsible for qualifications exams and licensure for these professionals, they cannot legally practice their profession without registering with FINRA. This means that FINRA’s jurisdiction is wide-reaching and can bring nearly any broker or financial advisor to arbitration.
The other party can either be an investor or another FINRA-registered professional. In the case of an investor, this covers anyone who has been wronged by a broker or advisor with whom they made any investments.
Examples of a person or entity typically registered with FINRA include:
- Licensed stockbrokers,
- Licensed financial advisors,
- Mutual fund managers,
- Brokerage firms,
- Securities firms,
- Investment firms, and any other person or organization that sells securities or investments to the public.
That Types of Cases Does FINRA Hear in Arbitration?
FINRA’s arbitration process is usually used by investors who feel as though their broker or financial advisor has somehow wronged them. This means that many elderly people who have been scammed by predatory investors, as well as any investor who was taken advantage of by bad brokerage or undisclosed costs and issues can file. Overall, there are a vast number of potential issues you may take to FINRA.
FINRA can hear disputes between investors and professionals based on fees or contract issues. Many issues with financial services are not explicit scams or problems with ethics. Many are simply breach of contract issues, where the investor feels that the advisor made promises they failed to keep.
In more serious cases, claims of financial negligence or mismanaged funds may come up. In these cases, the broker may have sold stocks at the wrong time or otherwise improperly invested the client’s money. In these cases, the investor may face serious financial harms they want redressed, and FINRA can help that happen.
In many instances, brokers are paid per transaction. This means that brokers may try to make as many transactions as they can, so they can charge you for each one. When brokers make excess transactions to increase transaction fees, it is sometimes called “trade churning.” This can even involve a broker making unauthorized transactions without your approval, just to bill you more. This kind of practice is unethical and very expensive, which can lead many investors to make FINRA claims.
Damages for a FINRA Case
In most FINRA cases, the investor wants restitution and compensation for their losses. In many cases where crooked brokers take your money, you are able to get some “compensatory damages” back. In cases of severe negligence or bad practices, you may even win “punitive damages” or have your attorneys fees paid by the other side. FINRA may also punish the broker or advisor by revoking or suspending their license. Talk to an attorney about what your case might be worth in FINRA arbitration.
FINRA Arbitration Lawyers
If you or a loved one was cheated by a financial advisor, stock broker, or another financial professional, you might be able to take your case to FINRA for arbitration. This can help you seek damages for your financial losses. For a free consultation on your case, contact the FINRA claims attorneys at Epperson & Greenidge, P.A.. Our number is (877) 445-9261.