FINRA

Financial Industry Regulatory Authority (FINRA) Arbitration and Mediation

Disputes between investors, broker-dealers, and their registered representatives are typically required to be brought before a self regulatory organization known as the Financial Industry Regulatory Authority (FINRA). Harrington, Ocko, & Monk, LLP has successfully represented clients in securities litigation matters before FINRA arbitration and mediation panels. The Firm is prepared to aggressively and effectively represent select investors, broker-dealers, and registered representatives in matters involving suitability of investments, misrepresentation and fraud, negligent supervision, churning, unauthorized transactions, and other claimed violations.

How does the process work? An investor commences a FINRA claim by filing a Statement of Claim with the FINRA’s Office of Dispute Resolution in New York. The relevant facts of the claim, causes of action, and legal remedies sought are required to be set forth in the Statement of Claim. Respondents have 45 days to submit a written Answer to the Statement of Claim, and must specify all of the pertinent facts and legal defenses in responding to the Statement of Claim.

In FINRA arbitrations, certain pre-trial discovery is permitted, although depositions are generally not allowed. FINRA requires both the Claimant and Respondent to produce documents and information responsive to FINRA’s Discovery Guide. The parties can also serve their own requests for documents and information pertinent to their case and can request that subpoenas be issued for relevant documents in the possession of third parties. After the completion of discovery, the parties are offered an opportunity to participate in FINRA’s non-binding mediation program, with the goal of seeking an amicable resolution of the claim prior to an arbitration hearing.

It typically takes approximately 8 to 12 months for the case to be heard before a formal arbitration panel. Depending upon the size of the claim, the panel consists of either a single arbitrator, or a panel of three arbitrators. A three person panel is required to consist of one member of the securities industry (typically a person with broker experience or an attorney with experience representing brokers), and two non-members of the industry (typically accountants, attorneys, or business persons).

The arbitrator selection process is critical since the arbitrators will not only be deciding the merits of a claim and determining appropriate damages, but will also rule on evidentiary issues and enforcement of FINRA Arbitration Rules. During this critical period early in the arbitration process, our Firm works with clients to rank and select the most appropriate arbitrators from a pool of arbitrators provided by FINRA.

The duration of a FINRA arbitration hearing typically is anywhere from 2 to 5 days. It typically takes approximately one month for the panel to deliberate and issue a written award. Since all arbitrations awards, including FINRA arbitrations awards, are subject to extremely limited grounds for appeal, awards are usually paid within 30 days of the date of the award.

If you are interested in having our Firm represent your company or yourself in a FINRA claim relating to suitability of investments, misrepresentation and fraud, negligent supervision, churning, or unauthorized transactions, please contact us for a confidential consultation.