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FINRA Arbitration

What Is FINRA Arbitration?

Arbitration is a means of resolving disputes between parties outside of federal or state court. In binding arbitration, the parties present evidence to an arbitrator or a panel of arbitrators and agree to abide by the decision of the arbitrator(s) regarding the dispute. Ideally, settling disputes by arbitration is faster and less complicated and time-consuming than going to court. As follows are some common questions many investors have about arbitration:

A. Do I Have to Submit My Claims Against a Securities Broker or Brokerage Firm to Arbitration?

Most securities brokerage firms and financial advisors have a mandatory arbitration provision included in their new account agreements. If you signed the new account agreement and do not have a defense to the enforceability of the agreement, you more than likely have to arbitrate any claims you may have arising out of the agreement. Should you file a claim in court anyway, the brokerage firm may request the court to send your case to arbitration.

If your dispute is with a FINRA securities brokerage firm (Broker-Dealer) or broker (registered representative), you most likely will have to arbitrate through FINRA’s Dispute Resolution system. Additionally, FINRA Rules require member brokerage firms to arbitrate disputes with customers on the request of the customer if certain requirements are met (FINRA Rule 12200).

Typical claims made in FINRA arbitration by customers include securities fraud, violation of state securities acts, unsuitable recommendations, churning, unauthorized trading, broker theft, and selling away. 

Mandatory arbitration clauses with registered investment advisors may require AAA arbitration, JAMS arbitration, FINRA arbitration, or arbitration in another forum.

B. What Are Some Advantages and Disadvantages to Arbitration?

The amount of pre-trial discovery of information is more limited in arbitration. For example, depositions, which can be costly and time-consuming, are generally not allowed in arbitration except in certain circumstances. Interrogatories and Requests for Admission are also not allowed by FINRA Rules. This can be an advantage or a disadvantage depending on whether you need additional information from the opposing side to make your case stronger. The rules of evidence in arbitrations are often more relaxed than in court. This allows parties to put in testimony and documentation that may not normally be admissible in court. Once again, this can be an advantage or a disadvantage. Arbitrations also offer very little rights of appeal. Once the award is made, the losing party has a difficult burden if he/she wants to attempt to vacate or overturn that award.

C. Who Makes the Final Decision in Arbitration?

Unlike in court, arbitrations are not decided by either judges or juries. Under FINRA arbitration rules, customers may request that their arbitration panel be composed of three public arbitrators. (Previously, one industry arbitrator was mandatory for three arbitrator panels). FINRA public arbitrators will often be attorneys or other local business persons. Three arbitrator panels are required by FINRA for claims over $100,000.00. After hearing the evidence and arguments in a case, the three arbitrators will announce their decision by filing a written award which will be publicly available on the FINRA website.

D. Do I Need a Lawyer for FINRA Arbitration?

Although you are not required to be represented by a lawyer in arbitration, it is always advisable to have one. Brokerage firms will almost always be represented by a lawyer at the hearing, and an investor representing himself/herself may not present all of the relevant evidence or arguments needed to win a case. Unlike in court, in almost all arbitration venues, your attorney does not have to be admitted to the bar of the state where the hearing takes place. Greco & Greco represents investors across the country and generally represents investors on a contingency fee basis so that clients do not have to pay any up-front attorneys fees.

Most of the hundreds of public customer claims the lawyers at Greco & Greco have filed over the years have been decided and resolved in FINRA arbitration. If you believe that your stockbroker / financial advisor or brokerage firm have wrongfully caused you losses in your investment account, please contact Scott Greco for a free attorney consultation.

Our Virginia securities fraud lawyers represent individuals from all states across the country and have decades of experience protecting the rights of customers, and holding securities firms responsible for the acts of their brokers.

E. Where Are FINRA Arbitration Hearings Held?

FINRA has hearing locations for arbitrations in every state. They typically will hold the in-person arbitration hearing in the closest hearing location in the state of the customer’s residence during the time of the dispute. Below is a list of the FINRA arbitration hearing location cities for each state:

Northeast Region

Hearings Locations:

Albany, New York; Augusta, Maine; Boston, Massachusetts; Buffalo, New York; Hartford, Connecticut; London, England; Manchester, New Hampshire; Montpelier, Vermont; New York, New York; Newark, New Jersey; Philadelphia, Pennsylvania; Providence, Rhode Island; Syracuse New York; Wilmington, Delaware

Western Region

Hearings Locations:

Albuquerque, New Mexico; Anchorage, Alaska; Boise, Idaho; Cheyenne, Wyoming; Denver, Colorado; Helena, Montana; Honolulu, Hawaii; Las Vegas, Nevada; Los Angeles, California; Phoenix, Arizona; Portland, Oregon; Reno, Nevada; Salt Lake City, Utah; San Diego, California; San Francisco, California; Seattle, Washington

Southeast Region

Hearings Locations:

Atlanta, Georgia; Baltimore, Maryland; Birmingham, Alabama; Boca Raton, Florida; Charlotte, North Carolina; Columbia, South Carolina; Jackson, Mississippi; Jacksonville, Florida; Little Rock, Arkansas; Memphis, Tennessee; Nashville, Tennessee; New Orleans, Louisiana; Norfolk, Virginia; Orlando, Florida; Raleigh, North Carolina; Richmond, Virginia; San Juan, Puerto Rico; Tampa, Florida; Washington, DC

Midwest Region

Hearings Locations:

Bismarck, North Dakota; Charleston, West Virginia; Chicago, Illinois; Cincinnati, Ohio; Cleveland, Ohio; Columbus, Ohio; Dallas, Texas; Des Moines, Iowa; Detroit, Michigan; Houston, Texas; Indianapolis, Indiana; Kansas City, Missouri; Louisville, Kentucky; Milwaukee, Wisconsin; Minneapolis, Minnesota; Oklahoma City, Oklahoma; Omaha, Nebraska; Pittsburgh, Pennsylvania; Rapid City, South Dakota; St. Louis, Missouri; Wichita, Kansas

Client Reviews
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“Greco & Greco represented me several years ago in a case in which my financial planner ignored my investment guidelines in making several very risky investments in my name. This individual was employed by a very large financial services corporation which refused to return my funds. I retained Greco & Greco.This after a few months resulted in a face to face negotiation with a team from the corporate office which supported the financial planner. After several hours including many strategy breaks and rejected offers a satisfactory settlement was reached. Without the skilled representation of Greco & Greco we would not have won such a settlement. I was very pleased with all aspects of their service including their timely feedback throughout the case.” J. W.
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“Scott Greco was very professional, and honest. I highly recommend this firm. Scott Greco explained everything in a way I could understand, and I never left the office with unanswered questions. If I ever need any other legal representation Greco & Greco, P.C will be my only choice.” Anonymous
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“W. Scott Greco represented me in my attempt to recover money lost in a ponzi scheme. He kindly and skillfully guided me through the process of submitting the required documentation of loss, provided sound legal advice regarding accepting arbitration, and kept me fully informed as the case moved forward. As a result of his work on my behalf, I recovered a large portion of my lost funds. I would absolutely, without reservation, recommend this firm to others.” Anonymous