Why It’s Important to Get Limited Discovery Right in FINRA Arbitrations
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
“Discovery” is a key component of all legal disputes. Whether you take your case to arbitration or file it in court, you have access to records and evidence that the other side has in their possession. You may also get the power to ask questions or bring the other side in for a deposition, which can help you gather much of the evidence you need to build your case. However, the opportunities for discovery are heavily limited in many FINRA cases. The FINRA arbitration attorneys at Epperson & Greenidge, LLP explain what these limitations are and why it is important to fully exercise your discovery rights in a FINRA claim.
What are the Discovery Rules in a FINRA Arbitration Case?
In most lawsuits, both sides have access to discovery as part of the trial process. Either side can use the court’s subpoena power to force the other side to turn over documents, records, and other evidence related to the lawsuit, which might provide evidence or information to help them build their case or challenge the other side’s case. In court cases, each side can often obtain depositions of their opponents (and their opponent’s witnesses). Depositions are recorded, on-the-record interviews similar to the testimony given at trial.
In FINRA arbitrations, you still have access to discovery, but with limitations. In any FINRA case, FINRA’s rules have a Discovery Guide which lists documents each side must produce. Many FINRA lawyers are afraid to stray beyond the listed documents, but you may request additional discovery if the documents you request are relevant to the case. Under FINRA’s Discovery Guide, the following documents must be produced:
- The relevant customer account information
- Agreements between the parties, e.g., brokerage agreements and contracts (especially for breach of contract claims)
- Correspondences between the parties
- Documents listing strategies, permissions, authorizations, etc. (especially for cases of unauthorized transactions)
- Disclosures and records of disclosures (especially for cases of omissions or undisclosed conflicts of interest)
- Documents detailing management, oversight, and compliance investigations;
- Reports of investigations by federal agencies
- Records of transactions and values of investments
- Information about potential resolutions to issues or negotiated settlements,
- And more
This information is expansive, and it can certainly help build any case. The information on this list is deemed to be discoverable in most cases, and you are automatically required to turn much of it over, rather than waiting for the other side to ask for it specifically.
Unlike lawsuits, in FINRA arbitration you do not have the ability to take depositions or file interrogatories. This means that the documents speak for themselves, and you do not have the right to bring in any witnesses or parties for on-the-record questioning before arbitration. These are not fatal limitations, and you can still build your case with the information you receive in discovery. However, it is important to work with a strategic attorney who can ensure that you have any and all additional information you need to secure your case.
How Does Discovery Strategy Help Win Arbitration Cases?
Ensuring that you have all the information you need in your case is essential to building a strong arbitration case. There is a common adage among trial lawyers that you never ask a question that you don’t already know the answer to. This applies to arbitration cases, as it is important to always drive testimony and in-court arguments to highlight important details of the case. If you are unable to use discovery to get the full picture of how your financial advisor or stockbroker mishandled your investments, your attorney will not be equipped with the proper information to drive the hearing to a successful outcome.
It is vital to review your case with an attorney and seek representation early on in your FINRA claim. Having an attorney handle the discovery phase on your behalf can help ensure that you have all necessary documents to prove your case. In arbitration, the arbitrators decide whether you have produced enough evidence to prove your case – but it is impossible to produce evidence you do not have.
The FINRA claims attorneys at Epperson & Greenidge take the time to fully explore the evidence in each and every case we handle. This includes filling in the gaps by requesting additional information not specifically listed in the Discovery Guide. While other attorneys may simply take the information that they were given and not ask further questions, our attorneys do our best to take full advantage of the limited discovery rules and build strong cases for our clients.
FINRA Arbitration Attorneys Offering Free Consultations
If you or a loved one suffered from financial negligence or unsuitable investments, talk to an attorney today. The FINRA claims attorneys at Epperson & Greenidge represent investors in claims against their broker-dealers. For a free consultation on your case, contact our law offices today at (877) 445-9261.