FINRA Background and Responsibilities
The primary objective of FINRA is ensuring that the country’s financial markets run fairly and smoothly. Toward this goal, FINRA educates investors and implements and enforces ethics guidelines for all registered brokers and broker-dealers. When these securities professionals and their firms do not comply with ethics rules and investors pay the financial price, FINRA provides an avenue for holding them accountable through arbitration, as well as potentially levying fines and other penalties. FINRA works under the supervision of the U.S. Securities and Exchange Commission (SEC).
If you believe you lost significant money because of the wrongful actions or negligence of your broker, you may be able to recover your investment by taking your case to FINRA arbitration. Securities investing is complex, though, and recognizing whether your loss was due to misconduct by your broker is not a simple undertaking. Our Illinois FINRA lawyers understand the dishonest schemes brokers use to commit fraud against investors and knows what evidence is required to prove it. We can help determine whether broker dishonesty or negligence is to blame for your investment losses.
Types of Fraudulent Investment Schemes by Brokers
There are a variety of common investment schemes that brokers may use to fraudulently make themselves more money. The good thing is that these schemes almost always leave a trail of financial documents that can support your case if you choose to proceed with FINRA arbitration.
Common Investment Schemes
- Misrepresentation and/or omission. Misrepresentation is when a stockbroker intentionally withholds material information or provides investors with misleading information in order to influence an investment decision.
- Excessive trading. Excessive trading, also known as churning, is when brokers over-trade in investors’ accounts in order to generate commissions for themselves on each trade.
- Failure to diversify. To avoid undue risk, investment portfolios should be diversified across businesses, industries, and product types. When they are not and investors lose money, brokers may be liable for a failure to diversify.
- Selling away. Selling away is when a stockbroker sells investments, often high-risk ones, that are not approved or offered by their brokerage firm.
- Unauthorized trading. Unauthorized trading occurs when brokers make trades in nondiscretionary accounts without the authorization of the investors.
- Unsuitable investment recommendations. When brokers recommend investment opportunities that are not aligned with the investment objectives and risk tolerance of their customers, those unsuitable investment recommendations may be evidence of fraud.
- Failure to supervise. Brokerage firms are responsible for overseeing their brokers and may be liable along with the broker if they failed to properly supervise or train a broker who commits a violation.
Sometimes when they are questioned, brokers who are defrauding investors may try to explain away losses as part of the risk of investing. Unless investors are highly experienced in the securities market, they may not know how to dispute their brokers and may simply try to live with the loss. But you should never have to just accept losing a large amount of money on an investment.
If you do not get an explanation for the investment loss that makes sense to you, you can bring your financial records and other relevant documents to one of our Illinois FINRA lawyers, who can examine your records for evidence of fraud. Even if your broker’s explanation does sound reasonable, you may still be able to bring a claim for recovery because you should be able to count on your broker to avoid large losses wherever possible.
If we find any evidence of misconduct, we’ll take the steps necessary to get your money back, which might require filing a FINRA claim for arbitration. Call us for help at 800.931.8452.
How a FINRA Arbitration Claim Works
After filing your claim for arbitration either directly with FINRA or through your attorney, which is recommended to have the best chance at a positive result, a single arbitrator or three arbitrators will be assigned to your case, depending on how much money is involved.
Arbitration hearings are similar to court cases in many ways. Both sides give opening statements, present their evidence, possibly call fact or expert witnesses, and present closing arguments. However, unlike going to trial, the arbitration process is typically less expensive and faster than filing a lawsuit against a crooked broker—claims that go to hearings take an average of 16 months to be resolved, unlike the years a trial can take. Also, the decision of arbitrators is final. What this means is that arbitration decisions cannot be appealed.
Not all claims go to arbitration hearings. Sometimes claims are able to be resolved through mediation with FINRA before the hearing, if both sides agree to mediation. Claims involving $50,000 or less are typically decided through a simplified arbitration process, which involves the arbitrator’s reviewing submitted documents to make the decision.
In any case, if you get an award or mediation settlement, your broker or advisor has only 30 days to pay you your money. If they fail to meet that deadline, it can result in additional sanctions by FINRA, and your Illinois FINRA attorney can take legal action, should it be necessary.
If You Are Awarded Money in Arbitration, Your Broker Must Pay You within 30 Days. If this Does Not Happen, Your Illinois FINRA Attorney Can Pursue Legal Action on Your Behalf.
Don’t Wait When You Suspect Fraud – Reach Out to Our FINRA Attorneys in Illinois
Pursuing arbitration through FINRA is often the best way to ensure that you are fully compensated for the losses you took due to broker negligence or misconduct. You may also have other options for getting your money back, depending on the details of your case.
If you are interested in learning more about how a highly trained Illinois FINRA lawyer at Wolper Law Firm, P.A. can help you with your claim or other options you may have, come in for a free, confidential case review. When you are ready to set up your free review, we can be reached by phone at 800.931.8452 or via the quick submission form included below.
FINRA FAQs
Our Illinois FINRA Lawyers Answer Common Questions
Filing a FINRA claim can be overwhelming, and the thought of having to bring your case before a panel of arbitrators may be intimidating. We’ve seen firsthand just how difficult it can be to gather up the courage to fight for the money that is rightfully yours. For this reason, we have provided answers below to frequently asked questions so you can better understand some of the most common concerns surrounding FINRA claims and what to expect if you choose to move forward with your arbitration claim.
If you have other questions or would like a more personalized idea of what’s to come for your case, specifically, contact our office to set up a free consultation with a well-informed FINRA lawyer in Illinois.
FINRA claims for arbitration have a statute of limitations of six years from the date the fraudulent actions occurred. However, in many cases, investors may not discover the fraud until a later date. In these situations, the clock may begin running on the date the misconduct was discovered. Every claim is unique, and if you are afraid of time running out on you, seek the counsel of an experienced Illinois FINRA lawyer who can advise you about the statute applying to your individual case. If you pass the deadline for your case without filing a claim, you will most likely be barred from filing.
In FINRA mediation, an impartial and trained mediator helps brokers/brokerage firms and investors resolve disputes and reach settlements. Mediation is an informal process in which neutral mediators work to facilitate communication between the parties. Mediators do not make resolution decisions themselves, but instead encourage parties to reach agreements that are mutually acceptable. For mediation to occur, both sides must agree to it. Mediation can take place before arbitration or even during the arbitration process.
As previously mentioned, going to mediation is an option, and filing a lawsuit could be another option. The potential downsides to these methods is that a mediation settlement may not result in a full recovery of your losses, and a lawsuit can take years to resolve. FINRA arbitration is often most likely to deliver the results you are looking for. Not only could you possibly recover full compensation for your losses, but you will have the opportunity to hold the liable party accountable for their misconduct, thus decreasing the chances that another investor will suffer damages as a result of the same irresponsible stockbroker or brokerage firm.
FINRA does not have a process for filing a lawsuit. Claims that come to FINRA are resolved through arbitration or FINRA mediation. The majority of securities fraud cases are handled through these methods, because most brokerage houses and investment firms contain language in their customer agreements that binds investors to arbitration in case of disputes. Some investors may have the option of filing a civil lawsuit if they have not signed a binding arbitration agreement or their investment advisors are unlicensed. An Illinois FINRA lawyer from our firm can counsel you about options for pursuing recovery in your investment fraud case.
No—you don’t have to hire an attorney to file a complaint. If you believe your broker defrauded you and you want to report it to help protect other investors, you can file a complaint online with FINRA. Through an online FINRA complaint, you can initiate an investigation of your broker and/or the brokerage firm; if a violation is found, FINRA will take appropriate actions against them. These actions could include fines, suspensions and even barring the broker from the industry.
Filing a complaint about an investment advisor and a claim for arbitration with FINRA are two different things. To be able to have your case heard and decided by arbitrators you must file a statement of claim with FINRA. You are not required to hire a lawyer to file an arbitration claim or to go through arbitration proceedings. But because of the complexities of the process, even FINRA suggests that wronged investors have legal help. You cannot appeal an arbitration decision, so it makes sense to start out on the strongest footing possible. Experienced FINRA attorneys in Illinois know what evidence is needed to prove fraud cases and how to convince arbitrators in their clients’ favor. Our FINRA attorneys in Illinois have a greater than 95% success rate in recovering compensation for investors. While no attorney can guarantee the outcome of a claim, our attorneys can guarantee that your case will get the serious attention that it deserves.
Anyone who invests in the stock market may be a victim of broker misconduct and fraud. Often people who are taken in by unethical brokers are passive investors who don’t regularly review their brokerage account statements, so they don’t realize that fraud is taking place. Elderly investors who have built up a lifetime of retirement savings are also often targets of unscrupulous brokers. In fact, elder abuse in investing has become a focus area for state and federal regulators. If you are a senior citizen who believes you have been the victim of broker fraud, our Illinois FINRA attorneys can help you understand your legal options. You can also get answers to your questions and report concerns about potential broker fraud at the FINRA Securities Helpline for Seniors. Remember, though, everyone of any age who invests can become the victim of stockbroker fraud. All investors should carefully monitor their accounts for any unusual and potentially fraudulent activity.
If your broker is found guilty of investment fraud, in addition to paying you restitution, your stockbroker could lose their broker’s license and certifications. Stockbrokers who commit fraud may also face jail time and hefty criminal fines to punish them for their wrongdoing. If you lost significant money in an investment and believe it was due to intentional fraud or negligence, contact our FINRA attorneys in Illinois for legal guidance today. Our well-informed Illinois FINRA lawyers can be reached seven days a week by calling 800.931.8452 or using our contact form.
Protect Yourself from Unscrupulous Brokers
Don’t Be Taken In By Shady and Suspicious Promises
Here are some warning signs of investment fraud:
- Your broker guarantees an investment will perform a certain way. Every investment involves some risk, and a broker cannot guarantee performance.
- A broker pressures you to make a quick decision on an investment, implying that if you don’t act right away you will lose the opportunity. Legitimate investment opportunities don’t disappear overnight.
- A stockbroker tries to sell you an unregistered security. Unregistered securities aren’t subject to all the laws designed to protect investors and are often sold by fraudsters.
- You are offered a stock, mutual fund or bond but are told there is no documentation for it. If a stock or mutual fund doesn’t have a prospectus or a bond doesn’t have an offering circular, it could be unregistered or otherwise fraudulent.
- The investment the broker describes is so complex that you can’t understand it. If you don’t understand the risks involved and they can’t be made clear to you, don’t invest.
- A security you are offered appears to provide consistent high growth and high returns even during market dips. Every investment can experience some ups and downs.
Investors who don’t pay close attention to their brokerage account statements are often targets of fraud. To protect yourself, review your statements regularly for unauthorized trades, excessive trading and other possible signs of broker misconduct or negligence. If you see anything unusual, bring it to the attention of your broker and/or brokerage firm. If it can’t be explained to your satisfaction, contact a FINRA enforcement attorney in Illinois from our law firm for assistance and report the broker to FINRA or another regulatory agency.
You can further safeguard your investment money by carefully investigating brokers you are considering using. When speaking with brokers, don’t be afraid to ask them about their experience and credentials. A reputable broker will be happy to inform you about his or her professional background.
Where to Review a Broker’s Credentials Online
You can check the FINRA website, the SEC website and state securities regulators for information about brokers (and brokerage firms), their backgrounds and whether they have been disciplined for negligence or fraud.
Here are links to those sites:
- FINRA Broker Check
- SEC Check Your Investment Professional
- North American Securities Administrators Association (NASAA) Contact Your Regulator
We hope the information in this section helps protect you from unethical brokers and brokerage houses. If you’ve been unfortunate and lost money to broker fraud or negligence, reach out for help.
Get Help from An Adept FINRA Enforcement Attorney in Illinois
You’ve worked hard for the money you invest. When you trust a stockbroker and brokerage firm to ethically and honestly handle your investments so that you can have a comfortable retirement or reach another important goal, learning that you’ve been defrauded of a large amount of money is devastating. It can bring all your plans to a screeching halt… potentially forever.
Our Illinois FINRA attorneys want to help you get your money back, whether through FINRA arbitration, FINRA mediation or a legal claim. We also want to hold unscrupulous brokers accountable for their actions. While many stockbrokers are honest individuals who sincerely want to help their clients grow their investments, the fair share who are negligent or dishonest negatively affect the reputation of the entire securities industry, as well as potentially ruining their clients’ financial lives. If you’ve lost a substantial amount of money and suspect it was due to broker misconduct, don’t wait to take action. The sooner you act, the faster you may be on the road to recovery.
Arrange a free consultation with a skilled Illinois FINRA lawyer for your broker fraud or negligence case by calling 800.931.8452.
Our attorneys at Wolper Law Firm, P.A. handle FINRA claims and other investment fraud cases for clients throughout the country. We can be reached seven days a week. Our business is to recover your investment losses.
Attorney Matthew Wolper
Matt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks.
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