SUMMARY: Virtually all account opening documents signed by investors contain mandatory arbitration agreements, whereby investors (and the brokerage firms) waive their right to trial in a court of law. Thus, to pursue legal action against financial entities, investors are required to file their claims with the FINRA Arbitration Forum.

Whenever an investor opens an investment account, the investor usually signs an arbitration agreement. Pursuant to that agreement, the investor forgoes their right to file an action in court against the bank or brokerage firm. Instead, the investor must file all claims against their investment professional, brokerage firm, or bank in a FINRAsponsored arbitration. This is called FINRA Arbitration. FINRA is the self-regulatory organization that regulates most investment professionals. The attorney that files the arbitration claim is not bound to a specific geographical practice location, as in court lawsuits. Arbitration attorneys from any state can file suit on a victim’s behalf.

FINRA arbitrations are held in less formal settings than a traditional court room. The FINRA arbitration hearings are held in FINRA dispute resolution hearing locations, hotels, or conference centers in locations closest to where the investor resides. Once an investor hires an attorney to file an arbitration claim on their behalf, the claim should be resolved through a final hearing within 15 months of filing. The FINRA arbitration claim is heard by a panel of arbitrators who are selected by the arbitration attorneys from a list of 10 local industry and non-industry panelists proposed and approved by FINRA. The panel may be composed of attorneys, accountants, teachers, retirees, and other professionals. Investors have the option of deciding whether they would like to have an arbitrator from the securities industry present on the arbitration panel.

Filing a FINRA Arbitration Claim

Costello Law Group are FINRA arbitration attorneys representing investors in arbitration and mediation, both federal and state courts in Maryland and throughout the United States.