FINRA Responsibilities
FINRA is overseen by the U.S. Securities and Exchange Commission (SEC). Their primary goal is to ensure that the financial markets in the United States are running smoothly and fairly. Some of their key responsibilities include educating investors, implementing and enforcing the guidelines on ethics for all registered brokers and broker-dealers, and ensuring that brokers and firms comply with these rules.
Investors have options when they have reason to believe that their stockbrokers or financial planners have wronged them in some way, causing them large stock and investment losses that could have been prevented if it hadn’t been for the misconduct of these individuals and/or corporations. Those investors can file statements of claim with FINRA and potentially be awarded repayment of their losses through arbitration or mediation. But knowing whether your losses were due to broker misconduct or negligence isn’t always easy.
Our experienced New York FINRA attorneys know the types of dishonest schemes that brokers use to defraud investors. A New York FINRA attorney from the Wolper Law Firm, P.A. will determine whether you are a victim of a stockbroker’s unlawful misconduct. If you are, we will outline your legal options and hold the broker or brokerage firm accountable.
When to File a Claim with FINRA for Investment Losses
Even if you have noticed a considerable loss in your portfolio, you might think it was part of the risk you took when investing in the first place. And it’s true: you take a risk when you invest. A financial advisor or stockbroker will not be liable for any losses simply because they made poor decisions or selected unfavorable investments.
Brokers, however, become liable for investment losses when their acts were intended for personal financial gain and, as a result, you suffered monetary damages. Over the years, fraudulent investment schemes have been identified. If you choose to proceed with FINRA arbitration, understanding and being able to prove these schemes will be critical to your success.
Common Fraudulent Schemes Conducted by Brokers
- Failure to Supervise. Brokerage firms may be liable if they failed to properly supervise or train a broker who commits a violation.
- Misrepresentation and/or Omission. Misrepresentation occurs when a stockbroker intentionally withholds material information or provides investors with misleading information to influence an investment decision.
- Excessive Trading. Excessive trading, also known as churning, occurs when brokers over-trade in investors’ accounts to generate commissions for themselves.
- Failure to Diversify. To avoid undue risk, investment portfolios should be diversified across businesses, industries, and product types. When portfolios are not diverse and investors lose money, brokers can be held liable.
- Selling Away. Selling away involves situations where 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 investors’ authorization.
- Unsuitable Investment Recommendations. When brokers recommend investment opportunities not aligned with their clients’ investment objectives and risk tolerance, those unsuitable investment recommendations may be evidence of fraud.
In the event you are unsure whether your broker defrauded you, you should schedule a consultation with one of our FINRA attorneys in New York. FINRA statistics show that more than 50 percent of FINRA claims are lost every year. At Wolper Law Firm, P.A., we have a 99% success rate and intend to keep it that way, if not better.
If you represent yourself in a FINRA arbitration, you increase your chances to become another unsuccessful FINRA statistic. If you retain one of our FINRA attorneys, you double your chances to win. Take the first step to recoup investment losses; call us at 800.931.8452 to schedule a consultation.
What Happens During the FINRA Arbitration Hearing?
In FINRA arbitration, independent arbitrators review the evidence and decide the outcome. Arbitrators are selected by the parties involved. Claims of $100,000 or less are heard by a single arbitrator and claims of more than $100,000 are heard by a panel of three arbitrators.
Claims valued at $50,000 or less are typically decided through a simplified arbitration process, where the arbitrator reviews the evidence and decides the case. Most claims valued at $50,000 or more proceed to a hearing, the process of which is akin to a civil court case. Both parties present their evidence and arguments to the arbitrator(s). The arbitrators review the evidence and testimony and then decide the outcome of the case. This decision is binding and cannot be appealed, a stark difference from a civil case where the verdict can be appealed.
In other words, you have just one opportunity to recover your losses. To secure the recovery of your investment losses, put your faith and trust in an experienced New York FINRA lawyer.
A FINRA attorney in New York may first seek FINRA mediation, but both parties must agree to it. FINRA mediation is an opportunity to sort through the other party’s arguments and identify their weaknesses. It can also be used as a genuine means to settle without the added stress of arbitration.
At Wolper Law Firm, P.A., our New York FINRA attorneys are strategic and innovative. We use mediation wisely and to your benefit. If a fair settlement can’t be reached, however, we do not shy away from arbitration but use our litigation experience to recover all your losses.
When we win your case, the other party has 30 days following the decision to pay the settlement. If the other party fails to provide payment, FINRA can impose additional sanctions, including additional fines, suspensions, or a barring from the securities industry. As your FINRA enforcement attorney in New York, Wolper Law Firm, P.A. will take all necessary steps to ensure you receive the settlement money.
Suspect Fraud? Don’t Wait—Retain Our New York FINRA Attorneys Today.
Pursuing arbitration through FINRA is often the best way to ensure that you are fully compensated for your investment losses that resulted from broker negligence or misconduct. You must, however, take immediate action to secure the evidence. But also, FINRA Code 12206 mandates a six-year statute of limitations.
No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim.
Failure to comply with the statute of limitations can be used as a defense by the broker. When the deadline expires and you file a FINRA lawsuit, it will likely be thrown out.
That said, the actual date of when you knew or should have known about the event giving rise to your FINRA claim is often not unequivocal. You should contact our New York FINRA attorneys even if you believe the six-year statute of limitations has expired.
To learn more about how our New York FINRA lawyers at Wolper Law Firm, P.A. can assist with your claim, contact us for a free, confidential consultation. We can be reached by phone at 800.931.8452 or via the quick submission form included below.
FINRA FAQs
Our New York FINRA Lawyers Answer Common Questions
Filing a FINRA claim requires a solid understanding of the process and an ability to gather and present the evidence persuasively and coherently. Many people find it overwhelming. But we at Wolper Law Firm, P.A. want our clients to be informed and best positioned to adequately anticipate the road ahead.
Below are answers to many of the most common questions we get when we first meet our clients. If you have specific questions, contact us for a free, initial consultation.
Arbitration can take as long as 12 to 18 months, which includes the hearing and the decision. But 18 months is only an average. The time it takes to settle or arbitrate your FINRA claim depends on the unique facts and circumstances of your case.
During FINRA mediation, the goals of an impartial and trained mediator is simple: help brokers or brokerage firms and investors resolve their disputes and reach a settlement. Mediation is an informal process where neutral mediators facilitate communication between the parties. Mediators do not make resolution decisions but rather encourage parties to reach mutually acceptable agreements. For mediation to occur, both parties must agree to it. Mediation can occur before or during the FINRA arbitration process.
You might be able to recover losses through FINRA mediation. Mediation, however, often renders a settlement that does not result in full recovery of investment losses. It is something you and your FINRA lawyer must discuss together.
Alternatively, a civil lawsuit could be filed, but that is only if your agreement does not require FINRA arbitration. Unfortunately, most agreements today include a FINRA arbitration clause. Our New York FINRA lawyer will thoroughly review and analyze your agreement and advise you accordingly.
To make a complaint against the broker or brokerage firm, you must file a complaint through FINRA. FINRA will investigate and take disciplinary action if violations are found.
FINRA recommends that you first inquire about issues with the broker or firm first. The initial query can be verbal, but if answers are unsatisfactory, you should send the broker or firm a written complaint. These communications can later be used as evidence during arbitration.
While filing a complaint with FINRA is not the same as filing an arbitration claim and will not get you your money back, it may help other investors in the future. Additionally, if FINRA is not the appropriate agency to investigate your investment issue, they will pass it on to the SEC or another appropriate regulatory agency.
When you invest significant money, you want to make sure your financial advisor or broker is trustworthy. Keep a watch out for warnings that could materialize in any of the following ways.
- Guarantees. Does your broker guarantee that an investment will perform a certain way? Every investment involves some risk, and a broker cannot guarantee performance.
- Pressure. Has a broker pressured 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.
- Unregistered Security. Did a stockbroker try 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.
- Absence of Documentation. Perhaps you were offered a stock, mutual fund, or bond but were 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.
- Too Complex to Be Good. If the investment the broker describes is so complex that you can’t understand it and don’t understand the risks involved, and they can’t be made clear to you, don’t invest.
- Too Good to Be True. Does the security you are offered appear 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.
No, you do not have to hire an attorney to file a FINRA claim. But remember, more than 50 percent of FINRA claims are lost to investors. You do not want to take that risk. Hiring an experienced, resourceful New York FINRA attorney to represent you is in your best interests.
Anyone who invests in the stock market may be a victim of broker misconduct and fraud. There are, however, two types of investors who are frequent victims.
- Passive Investors. Often, brokers take advantage of investors who fail to regularly review their brokerage account statements and, because of the latter, do not realize they are victims of fraud until it’s too late.
- Elderly investors. Elderly investors with a lifetime of retirement savings are also targeted. In fact, elder financial abuse is a priority for state and federal regulators.
If the broker is found guilty of investment fraud, in addition to paying restitution they could lose their broker’s license and certifications. Stockbrokers can also face criminal charges for fraudulent activity and, if found guilty, can face hefty fines and imprisonment.
Contact a Trusted New York FINRA Enforcement Attorney
You invest to diversify and build your financial resources. You don’t invest to lose it all to a broker or firm which has unlawfully managed your investment account to finance their personal goals. At Wolper Law Firm, P.A., we are not afraid to hold New York brokers accountable for their misconduct, and we have a 99% success rate because of our efforts.
Our attorneys at Wolper Law Firm, P.A. handle FINRA claims and other investment fraud cases for clients throughout the country. Schedule a free consultation by calling us at 800.931.8452. We can be reached seven days a week.
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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