INVESTORS who lose money because of misconduct by brokers or other investment professionals have the option (or may be required by contract) to pursue arbitration to recoup losses through the Financial Industry Regulatory Authority (“FINRA”). FINRA operates the largest dispute resolution forum in the securities industry, and adjudicates disputes between financial professionals and their clients. A brokerage firm must arbitrate if a customer requests, a brokerage firm must arbitrate at FINRA.
Unscrupulous brokers victimize investors in many ways. For example, financial professionals may commit securities fraud (where the broker misrepresented what he was selling), recommend unsuitable investments (for example, selling excessively risky investments), engage in churning (trading without permission to generate excessive commissions), trade without authorization, or simply neglect clients and their accounts.
Because of the high stakes and complexity of FINRA proceedings, clients often need the advice and guidance of a skilled attorney. Finkelstein Thompson’s clients often retain the firm on a contingency basis, meaning the client bears no out-of-pocket costs other than a percentage of any recovery achieved.
REGISTERED REPS and brokerage firms must arbitrate with FINRA any dispute between them that involves the securities business. These disputes often arise upon departure from a firm, when substantial sums are claimed to be owed to or from the firm. Disputes may also involve claims of misappropriation of trade secrets, poaching of clients, or non-compete clauses. These proceedings can be complex, and firms will use experienced lawyers to represent them. The individual registered representative will be wise to be equally armed.