What is Securities Arbitration?
Different from lawsuits with a judge and jury, arbitration allows parties to resolve disputes through a neutral third-party called an arbitrator who has knowledge in the areas of disagreement. Arbitrations are now frequently used by commercial businesses as a fast and inexpensive process to resolve complicated disputes.
The Financial Industry Regulatory Agency (FINRA) is a regulatory agency that oversees the securities industry. Every brokerage firm, their representatives and stock brokers are all registered with FINRA. Under the registration agreement, brokers are bound by the FINRA Code of Arbitration Procedure to arbitrate disputes with customers and further, a customer can force brokers to arbitrate disputes.
The Top 3 Common Consumer FINRA Claims:
- Unsuitable Investments
FINRA rules require that your broker must have a reasonable basis to believe that a transaction or investment strategy that your broker recommends is suitable for you. Sometimes called “Know Your Customer” rules, your broker must know the particulars of your finances. Using industry knowledge and litigation experience we can help determine if you were victimized by unsuitable investments.
Churning occurs when a broker buys and sells securities in an account mainly for the purpose of generating commissions that benefit the broker. It may not matter if the trades are profitable for you if they were undertaken for the purpose of generating commissions. We can help evaluate whether you were a victim of account churning and what amount of damages you suffered as a result.
- Mutual Fund Abuses
It is widely understood that mutual funds are not suitable for use as short term trading vehicles but that may not stop an unscrupulous broker. Sometimes a mutual fund held for several years can be the subject of abuse because of back-end loads — fees charged where mutual fund shares are sold before they have been held for a certain length of time. Other abuses can come from failing to advise a customer about breakpoints for certain dollar amounts of investment transactions. If any of these things happened to you, you may be able to recover from the broker or his firm.
For more information or to schedule a consultation, please email me at David@KasellLawFirm.com or call (718) 404-6668. I look forward to working with you!
This material may be viewed as attorney advertising and does not constitute legal advice. This information does not create an attorney-client relationship between you and the author. This article strictly represents the personal views of the author on the date it was written and such views are subject to change without notice.