FINRA Arbitration

Frequently Asked Questions:

What is FINRA arbitration? 


FINRA Arbitration is a private process operated by the FINANCIAL INDUSTRY REGULATORY AUTHORITY (“FINRA”) to resolve disputes between investors and investment brokers. Most brokerage accounts contain an agreement to submit all disputes to FINRA arbitration.

I lost money with my broker. Am I entitled to recover?


You are entitled to recover when your broker acted negligently or wrongfully.

For example: you are entitled to recover if your broker mismanaged your account or recommended investments that are unsuitable for you (i.e. recommended high risk investments although you are a conservative investor); where your broker excessively traded your account to earn commissions (known as churning) or made misrepresentations about an investment.

How do I know I have been wronged? 


Investors generally have a sense of whether the investments their broker recommended were appropriate. For example, if you are a conservative investor you may feel that the investments recommended by the brokerage were riskier than you expected; or if you notice a large number of transactions and excessive commissions charged in your account; or if you later learn something about an investment that your broker failed to explain.

Ultimately, if you feel like you have been wronged you should seek a consultation with an experienced attorney to evaluate your potential claims.

How much does an initial claim evaluation cost? 


Absolutely nothing. We offer a free confidential consultation with an experienced attorney. That attorney will further review your documents in detail and make a determination of whether our firm can help.

What is the difference between arbitration and court


Similar to going to court, arbitration involves each party in the dispute presenting their side of the story through witnesses and other evidence. However, unlike court, you are not entitled to present your case to a jury. Instead, a panel, consisting of three people called arbitrators, hears the case and makes a decision at the conclusion of the hearing.

Is the decision of the arbitrators final?


Yes. Arbitration with your brokerage firm is final and binding. The decision is not subject to review by a court except under very limited circumstances.

What happens after the arbitration hearing?


When a customer obtains an award at arbitration, the brokerage firm or individual broker generally has 30 days to pay the total amount awarded or face suspension of their brokerage license.

Did you know that the FINRA.org web site provides background information about individual stockbrokers and their firms? California’s securities regulator, the Department of Corporations also provides useful broker information and investment tips. You can also check our client Resources page for more information. 

For a free consultation with one of our skilled attorneys, please contact us today. We will put our experience and knowledge to work to obtain the best results for your case.