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Representing Investors, Registered Professionals And Investment Firms In FINRA Arbitration Proceedings

Disputes within the securities industry are typically resolved through FINRA’s securities arbitration process. This is true for disputes involving any combination of investors, financial professionals and financial institutions.

It is important to work with a securities law firm that understands the complexities of FINRA’s securities arbitration process. Lewitas Hyman represents investors, financial professionals and firms in FINRA arbitration proceedings nationwide.

If you have further questions or are the subject of a securities-related dispute, contact our Chicago office at (888) 655-6002 to schedule a free consultation.

What Is Arbitration?

Arbitration is a dispute resolution process that involves a neutral adjudicator(s) – the arbitrator(s) or collectively the arbitration panel. These parties are selected by the parties to the litigation. The arbitrator(s) review(s) the pleadings filed, rules on discovery disputes and other motions, considers evidence and testimony at a final hearing, and then renders a decision. Decisions made by an arbitration panel are binding on all parties. There are very limited circumstances in which a ruling by an arbitration panel can be challenged or appealed.

What Is FINRA’s Arbitration Process?

1: Filing the Claim

One party (the “Claimant”) files a Statement of Claim with FINRA. The claimant will supply details of the dispute and the relief they are requesting against the other party (the “Respondent”).

2: Responding to the Claim

The Respondent is typically afforded 45 days from receipt of the Statement of Claim to respond by filing an Answer. The Answer typically provides the Respondent’s position as to the allegations in the Statement of Claim including all known defenses.

In addition to responding to the Statement of Claim, at the time the answer is filed, the Respondent can also submit a Counterclaim that asserts any claims against the Claimant.

3: Selecting Arbitrator(s)

A pool of potential arbitrators is first selected randomly by FINRA and provided to the parties.  Parties are also provided with information concerning each potential arbitrator. Each party then ranks arbitrators in their order of preference and are allowed to strike a limited number of arbitrators from consideration. FINRA then matches up the rankings to determine who will serve as arbitrators on the case.

4: Prehearing Conference

After the arbitration panel is chosen, the Initial Prehearing Conference (IPHC) is scheduled. The panel meets with both parties by videoconference to establish final hearing dates, and the discovery schedule for the case and to address any other preliminary matters.

5: Discovery

During discovery, the parties can request documents and some limited written information that relates to the identification of individuals, entities and time periods that are relevant to the dispute. Except in limited circumstances depositions are not allowed in FINRA arbitration proceedings.

6: Hearing

The structure of the hearing is similar to a trial. Parties make opening statements, present evidence, call witnesses and conclude with a closing statement. Both parties have the right to examine and cross-examine, facts and expert witnesses. The arbitration panel can also ask the parties counsel and all witnesses questions.

7: Decision And Awards

The arbitration panel typically reaches a final decision within 30 days of the final hearing and issues a publicly available Award. Unless requested, the Award does not provide any reasoning behind the decision. The Award is legally binding.  All sums due to be paid resulting from an Award are typically due within 30 days of the issuance of the Award. Failing to pay in a timely manner can result in a FINRA suspension.

8: Appeals

FINRA does not allow appeals of an arbitration ruling, but federal and state laws will consider a Motion to Vacate the Award. Generally speaking, to prevail on a Motion to Vacate, one must establish that the Panel engaged in some form of misconduct or bias, exceeded the scope of the issues presented or grossly misapplied the law. Motions to Vacate are rarely granted.

Offering Nationwide Representation In FINRA Arbitration Proceedings

Lewitas Hyman regularly handles arbitration disputes before FINRA. If you have questions concerning FINRA arbitration, please call (888) 655-6002or use our online contact form to schedule a no-cost case evaluation.