Investors trust their brokers to do their jobs correctly and manage their finances to meet their financial goals. While brokers cannot control everything that happens in the market, they have a duty to their clients to manage their money appropriately given the circumstances.
Not all brokers honor their duties and take advantage of their clients. They may churn accounts, make poor investments, charge excessive fees and make other decisions that cost the investor money that they should not have lost.
Investors may have recourse against the brokers, but some may not want to go through a lengthy court proceeding. Investors may have another option, though. They may be able to utilize the Financial Industry Regulatory Authority (FINRA) arbitration process to resolve their disputes.
FINRA arbitration process
Arbitration uses arbitrators instead of judges and the process is a more streamlined process than traditional court proceedings. The process starts by filing a claim with FINRA who will serve the claim on the broker who is referred to as the respondent. The broker would then file an answer to the claim stating their side of the dispute.
After that, the parties will choose an arbitrator and attend a prehearing conference with the arbitrators. At this conference, the parties and arbitrator establish a date for the evidentiary hearing, set discovery deadlines, set motion deadlines and discuss other preliminary matters.
The parties will then exchange discovery, which is the documentation relating to the claims and defenses. The parties then prepare for and attend the evidentiary hearing.
At this hearing, both sides will present their evidence and documentation to the arbitrator and also testify about what occurred. After the hearing, the arbitrator will decide on the dispute.
This may seem like a long process, but it is still much shorter and less costly than a court proceeding. It can be a helpful way for investors to resolve their disputes against brokers and hopefully receive the compensation they deserve. Experienced attorneys understand the arbitration process and may be able to guide one through it.