When to File a Claim with FINRA for Investment Losses
Even if you have noticed a considerable loss in your portfolio, you may simply think that it was part of the risk you took in investing in the first place. This may be true in some cases, but you should be able to count on your stockbroker to avoid such losses wherever possible.
Some stockbrokers will make poor decisions surrounding your investments if it means they’ll see considerable personal financial gains, so you should be prepared to bring them to justice for this type of misconduct.
With that being said, there are some types of fraud that brokers engage in more frequently than others. 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.
These schemes include:
- 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 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.
In the event that you are unsure whether you’ve been defrauded by your broker, you can bring your financial records and other relevant documents to one of our Texas FINRA lawyers, who can assist you with your case.
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.
What Happens in the FINRA Arbitration Process and 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 decided by a single arbitrator while claims of more than that amount are decided by a panel of three arbitrators.
Not all arbitration claims go to hearings. Claims of under $50,000 may be decided through the simplified arbitration process, in which the arbitrator makes his or her decision based on all the materials submitted. For claims that go to in-person hearings, the process is similar to a court case in that both sides present their evidence and arguments to arbitrators, who then give their decision after hearing all the testimony and reviewing the evidence. Arbitration is not like a civil lawsuit when it comes to that decision, however. In arbitration, the decision of arbitrators is binding and cannot be appealed. If the decision does not go in your favor, you will not have a second chance for it to be heard.
For this reason, many wronged investors will start off by going to FINRA mediation, if both sides agree to it, in the hopes of obtaining a settlement prior to going to arbitration. If mediation is unsuccessful, the next step is arbitration.
Even without an appeals process, arbitration is often more advantageous then going through a civil court proceeding. It is typically less formal, less expensive and faster.
The decision of arbitrators is binding and cannot be appealed. To have the best chance at getting a recovery, you need a skilled Texas FINRA lawyer advocating for your rights.
Don’t Wait When You Suspect Fraud – Reach Out to Our Texas FINRA Attorneys
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. And you shouldn’t wait if you suspect your broker of fraud that cost you money. FINRA Code 12206 mandates a six-year statute of limitations, or deadline, for filing claims for arbitration.
It reads, “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.” If your claim is not made within this time frame, you could lose the chance to go to arbitration. However, you should not give up on the possibility of recovering your money, even if this deadline has passed, without speaking to a Texas FINRA attorney. Investment fraud case deadlines are not cut and dried. When you actually discovered your loss of money due to broker fraud may affect the deadline in your case.
To learn more about how our Texas FINRA lawyers at Wolper Law Firm, P.A. can assist with your claim, contact us for a free and confidential consultation. We can be reached by phone at 800.931.8452 or via the quick submission form included below.
Our Texas 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 specific case, contact our office to set up a free consultation with a well-informed Texas FINRA lawyer.
According to FINRA, the average arbitration claim takes 16 months to be resolved. If the decision goes in your favor, your broker or brokerage firm has a maximum of 30 days to pay you once they receive the written decision. The same is true if you settled your claim through FINRA mediation. If they fail to pay you within that timeframe, FINRA can suspend or cancel the registration of the broker and/or their firm. If you are owed money through FINRA arbitration or mediation that you have not received, contact our law firm for help.
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 excellent option if you want to avoid a hearing, and filing a lawsuit could be another option. The potential downside 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 the 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.
Investment disputes that come to FINRA are settled through arbitration (or mediation), not through a civil lawsuit. However, in some cases, investors may wish to file lawsuits through the courts rather than going to FINRA arbitration. But if you have signed an arbitration agreement with your brokerage firm, you probably will not be able to resolve your claim through a lawsuit in civil court.
If you haven’t signed an agreement, our Texas FINRA attorneys can help you explore your options for pursuing restitution to see what makes the most sense for your situation. Call us at 800.931.8452 to arrange a free consultation. Our attorneys are highly experienced at representing clients, both in FINRA arbitration and in civil litigation.
When you are looking for a stockbroker or investment advisor, don’t be afraid to ask a lot of questions. Ask the broker or advisor about their background, their years of experience, and their certifications and licensing. Ask how they communicate and work with clients. Ask about their fees and how they get paid.
You can also check online securities industry resources that provide information about brokers and advisors, including whether they have faced disciplinary actions in the past.
Visit these sites to learn more about potential brokers:
- FINRA Broker Check
- SEC Check Your Investment Professional
- North American Securities Administrators Association (NASAA) Contact Your Regulator
You can file a claim with FINRA without the help of an attorney and represent yourself before arbitrators. The FINRA website discusses the process for filing and representing yourself, although it recommends that investors hire an attorney to provide direction and advice and points out that brokers/brokerage firms will almost certainly have legal help of their own. When your investment money is at stake, you stand the best chance of recouping it with the help of an attorney who understands securities law and the FINRA arbitration process. When our Texas FINRA attorneys represent your claim, you can be sure that your case will be handled skillfully and professionally. Contact us for a free consultation so that we can evaluate your situation and advise you of the strength of your claim.
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 Texas 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 attorney for legal guidance today. Our well-informed Texas 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 Lured 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 Texas FINRA enforcement attorney from our law firm for assistance and report the broker to FINRA or another regulatory agency.
How Do I Report a Broker to FINRA?
In addition to filing a claim for arbitration to recover your money, you may want to make a complaint against your broker or firm with FINRA. When you file a complaint, FINRA will investigate and take disciplinary action if violations are found. These actions could include fines, suspensions or barring from the securities industry. FINRA recommends questioning your broker about issues with your account before filing a complaint and, if the answers you get are not acceptable, complaining in writing to the brokerage firm itself. If your problem is not resolved, this written complaint may be used as evidence if you go to 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 other regulatory agency.
Contact a Knowledgeable Texas FINRA Enforcement Attorney
Losing your hard-earned money to an unscrupulous broker or investment firm can be devastating. As an investor in the securities market, you know that you always face some risk, because that is simply the nature of investing. However, investment losses should never come about because of a dishonest or incompetent broker. If your broker and/or brokerage firm has cost you your retirement savings or other money, a Texas FINRA lawyer from our law firm will investigate the circumstances and counsel you about going to arbitration to get your money back. We are not afraid to hold brokers accountable for their misconduct and have a 99% success rate in doing so and getting recovery for our clients.
Not all brokers or investment advisors are dishonest. But when you are an investor, all it takes is one unethical broker to potentially cost you your life savings and destroy your plans for retirement and the future. If you have lost a large amount of investment money and believe your broker was to blame, reach out to our attorneys today. Or if you are seeing signs that your broker may not be on the up-and-up, our Texas FINRA lawyers can advise you about protecting yourself now, so you don’t lose money later.
Schedule a free consultation with an experienced Texas 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.