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FINRA Arbitration: What Investors Need to Know

A balance scale with coins, including pennies and quarters, is placed over scattered dollar bills, symbolizing the delicate nature of financial disputes often seen in FINRA arbitration.
September 19, 2024

FINRA (Financial Industry Regulatory Authority) arbitration is a crucial mechanism for resolving disputes between investors and brokers. It offers a streamlined, cost-effective alternative to litigation, allowing investors to recover losses from broker misconduct or investment fraud. Understanding the FINRA arbitration process is essential for investors seeking justice.

What is FINRA Arbitration?

FINRA arbitration is a dispute resolution process governed by specific rules designed to protect investors. Unlike litigation, which involves a lengthy court process, arbitration is typically faster, more private, and less formal. According to FINRA, the arbitration process is mandatory for brokers when disputes arise with clients over securities transactions, as outlined in the standard broker-client agreement.

The FINRA Arbitration Process

The process begins when an investor files a statement of claim, detailing the dispute and the damages sought. The respondent (usually the broker or brokerage firm) then files an answer. Both parties select arbitrators from a FINRA-provided list, and a hearing is scheduled. During the hearing, evidence is presented, witnesses may be called, and the arbitrators will eventually render a decision, known as an “award.” FINRA arbitration awards are binding and enforceable in court.

Advantages of FINRA Arbitration Over Litigation

1. Efficiency

Arbitration is typically faster than litigation, with cases often resolved within 12-16 months, compared to years in court.

2. Cost-Effectiveness

Arbitration generally involves lower costs, as there are no extensive pre-trial procedures like discovery.

3. Expertise

Arbitrators with specialized knowledge in securities law are selected, ensuring that complex financial issues are properly understood.

4. Confidentiality

Unlike court cases, arbitration proceedings are private, protecting sensitive information from public exposure.

Why Choose Arbitration?

Investors often choose arbitration over litigation due to its speed, cost, and the expertise of the arbitrators. Additionally, the binding nature of FINRA arbitration awards ensures that the outcome is final, reducing the likelihood of prolonged disputes. However, navigating the process requires experienced legal representation.

How Girard Bengali Can Help

At Girard Bengali, our investment recovery attorneys are well-versed in the FINRA arbitration process. We understand the complexities involved and are dedicated to helping investors recover losses from broker misconduct and investment fraud. Whether you are dealing with unauthorized trading, churning, or other forms of misconduct, our team of California securities attorneys at Girard Bengali law firm is here to guide you through the arbitration process and fight for your rights.

For more detailed information on FINRA arbitration, visit the FINRA website.

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