|
Advantages |
Disadvantages |
|
Faster than court
proceedings. |
Compulsory –
the right to file a
lawsuit is waived. |
|
Less expensive
than court
proceedings. |
Three arbitrators
preside over the
process, one of whom
is affiliated with
the securities
industry. |
|
An ‘Equitable
Forum’ –
arbitrators seek a
‘fair’ result for
all parties, without
rigid application of
legal doctrine or
rules of evidence.
|
Limited
‘Discovery’ –
only document
requests and limited
written questions
are allowed.
|
|
Arbitration is a
one shot process.
There is no absolute
right to appeal an
adverse arbitration
award. Depending on
your satisfaction
with the outcome,
this may be an
advantage or
disadvantage. The
grounds for
appealing an
arbitration award
are generally
limited to
improprieties in the
arbitration process,
such as one
arbitrator being
partial to one party
over another, the
arbitration process
being tainted by
fraud, or other
arbitrator
misconduct. |
|
Filing a Claim
As securities arbitration attorneys,
our firm will first gather information
from a client, including the client’s
recounting of the investments giving
rise to the claim and the gathering of
necessary documents from the client and
other sources.
Second, a
document called a “statement of claim”
is filed with FINRA . The client is the
“claimant” and the brokerage firm with
which the broker is affiliated and the
individual broker, if named in the
statement of claim, are the
“respondents.” The statement of claim
sets forth the facts which provide the
basis for the client’s claims, the legal
theories or claims asserted by the
client against the respondents and the
damages which the client seeks to
recover. Each statement of claim is
tailored to the facts surrounding the
client’s situation. As a Florida
securities arbitration lawyer, I prepare
all of the paperwork for you.
The most
common bases for a statement of claim
are:
Third, a
uniform submission agreement is filed
in which the claimant agrees to be bound
by the arbitration award rendered by the
panel.
Finally,
a filing fee is paid to FINRA, which
varies according to the amount of
damages the claimant seeks to recover.
For claims in excess of $50,000 in
damages, the filing fees range from $975
to $1800.
The
Respondents’ Answer
FINRA processes the statement of
claim, which typically takes between
7 and 14 days. It is then mailed to the
respondents named in the claim. The
respondents have 45 days from the date
of the letter to respond in writing to
FINRA. A copy is received by our office.
Motions to
dismiss a statement of claim are
sometimes served by respondents, but
FINRA has made it clear that such
motions are only to be granted in
extraordinary and limited circumstances.
If the respondents believe they have a
counterclaim against the claimant, the
counterclaim is provided along with the
respondents’ answer.
The
Arbitration Panel
FINRA sends three lists of proposed
arbitrators to counsel for each of
the parties within 30 days after the
answers from the respondents are due.
The panel will consist of three
professional arbitrators, two of whom
are not affiliated with the securities
industry.
As your
securities arbitration attorney, FINRA
rules allow us to participate in the
selection process. We may elect to
strike certain names from the lists, and
will rank the remaining arbitrators in
order of preference. This is based on
our extensive experience as securities
arbitration lawyers, and involves
careful review of disclosure documents
on each proposed arbitrator, which set
forth each arbitrator’s educational
background, employment history, conflict
information, and awards history.
Counsel for
the respondents engages in a similar
process, and FINRA uses the parties’
rankings of the arbitrators to appoint
the panel.
The
Initial Pre-hearing Conference
After the arbitration panel is
appointed, a telephone conference
call is scheduled to accept the
arbitration panel, agree upon the dates
for the hearing, establish a discovery
and briefing schedule and discuss any
anticipated motions. Only the
arbitrators and counsel for the parties
participate in the conference call.
Clients do not need to be present for
this call.
Discovery
Discovery in FINRA arbitration
proceedings is limited, and consists
mostly of producing documents.
Depositions are generally not allowed.
Depositions may be taken only upon the
approval of the arbitration panel under
limited circumstances, such as to
preserve the testimony of an ill or
dying witness or make available the
testimony of a critical witness who is
unable or unwilling to attend the final
hearing.
The FINRA
“Discovery Guide” prescribes certain
documents which are required to be
produced by the parties based on the
types of claims asserted. Parties may
request additional documents from one
another and may ask the arbitrators to
issue subpoenas for the production of
documents by third parties. The only
other means of discovery in FINRA
arbitrations is the submission of
limited written questions to an opposing
party for such information as the
identification of individuals, entities,
or time periods related to the dispute.
Settlement or Mediation May Occur
The parties may engage in settlement
negotiations or a mediation before
the final hearing is held. This may
allow the claim to be resolved without
having it heard by the arbitration panel
and eliminate the uncertainty of the
outcome from an arbitration hearing.
According to FINRA, approximately 80% of
all claims filed are resolved by
settlement or mediation before a final
hearing. In either case, as your
securities arbitration lawyer, we will
discuss with you the advisability of
this process, and will assist you
throughout, and handle the discussions
on your behalf.
Settlement negotiations can occur
directly between the parties or
their counsel to determine whether there
is an amount of money that the claimant
will accept to resolve his or her
claims, which the respondents are
willing to pay.
Mediation
is a more formal process, which
involves the use of a professional
mediator to assist the parties in
attempting to negotiate a resolution of
the dispute.
A
settlement agreement is prepared and
executed by the parties, if a settlement
is reached directly by the parties or
with the assistance of the mediator.
Such settlement agreements typically
require payment of an agreed upon sum by
the respondents to the claimant and the
release by the claimant of all of his or
her claims against the respondents.
The
Final Hearing
If the claim is not settled
through negotiation or mediation, the
final hearing before the panel of
arbitrators is usually held in the FINRA
hearing location nearest to the
claimant’s residence.
Opening
statements by counsel describe the
anticipated evidence. Then, witnesses
testify and are cross-examined and
documentary evidence is introduced. The
hearing concludes with closing arguments
by counsel, in which the evidence is
summarized and applicable legal
authority is provided to the arbitration
panel.
The
arbitrators will then meet in
private and decide the outcome of the
case. Their ruling is submitted to
FINRA to be incorporated into a written
arbitration award, which all arbitrators
sign.
Arbitration
awards are not required to set forth any
rationale or reasoning of the
arbitrators, and typically do not.
Rather, the award indicates which party
prevailed, and if the claimant
prevailed, the amount of the monetary
relief awarded to the claimant.
Arbitration Fees
The arbitrators have the discretion
to dictate which party will be
responsible for paying the
arbitrators fees. FINRA charges $800 per
day for each arbitrator or $2400 per day
for the entire panel. In their award,
the arbitrators may direct that the
claimant or the respondent pay all of
the arbitrator’s fees or may divide the
fees in some fashion between the
parties.
You will be
happy to know that we handle securities
arbitration cases on a contingency
basis. There is no legal fee unless a
recovery is obtained. Clients are
responsible for out-of-pocket costs such
as filing fees and expert witness fees.
However, there is no charge for initial
client consultations or the initial
evaluation of a client’s case.
Evaluating Your Claim
If you are uncertain whether your
investment losses may have been due to
some form of stockbroker misconduct, we
can help.
Contact me for an evaluation of
your potential claim. I will assess the
merits of your case and if appropriate,
arrange a consultation to discuss your
options. There is no charge.
