Category: FINRA Arbitration

FINRA Arbitration Orlando, Florida

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FINRA stands for the Financial Industry Regulatory Authority. It is an organization that oversees the securities industry. The organizations primary function is to protect investors and does so by subjecting traders to a set of rules and regulations. Enforcing rules and subjecting violators to punishment is what takes place after the detection of any wrongdoing. Educating the public is a primary function as well, as the best way to reduce the impact disputes have, is to avoid them altogether. Being that we live in an imperfect world and trade in an imperfect marketplace, disputes are inevitable. Once a dispute ensues, FINRA’s forum handles the overwhelming majority of arbitration’s and mediation’s with locations in all 50 states as well as in the United Kingdom and Puerto Rico.

Since practically all disputes in this industry pass through the hands of FINRA, it is important to retain an attorney that is knowledgeable, experienced and tested when it comes to FINRA regulations, procedural nuances and formal hearings. While resolving a security complaint doesn’t necessarilly require you to have an attorney, if you are seeking a beneficial outcome, it is in your best interest. Brokerage firms will be represented by an attorney which is why you need to come represented as well. The attorneys that that defend brokerage firms are savvy and you’ll need a fierce advocate to represent your best interests.

Depending on the circumstances, a dispute will either result in Arbitration or Mediation. The former closely parallels a trial that would take place in a United States court. The state of Florida has specific narrowly tailored guidelines for arbitration that change the landscape of the field. In other states, individuals with no license to practice law can provide advice to disputant investors for a fee. Arrangements of this nature are banned in Florida. In addition to this, arbitrators can include reasonable attorneys fees as part of the settlement for the receiving party. Before any type of settlement is awarded, the facts are reviewed. The process requires an initiation (commencement) , a statement of claim, examination of witnesses and presentation of evidence.

The Hanley Law is a South Florida based firm with the FINRA experience and insight needed to successfully secure a settlement on your behalf. The firms history with the security industry precedes the creation of FINRA. Whether your investments were poorly handled or you were the victim of stock fraud, Hanley Law offers a free case evaluation to determine the best course of action for you.

How to Recover Damages Through Securities Arbitration

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Florida Securities Arbitration Attorneys at Hanley Law, PLLC

If you have investments with a financial corporation or brokerage firm, it’s important to monitor your investments to ensure they are being handled according to your agreement with the broker. If you suspect that some fraudulent activity might be going on, including any activity you didn’t consent to, you might want to consider resolving the issue through arbitration. Arbitration is how the majority of disputes in the securities industry are resolved (as opposed to a traditional courtroom trial) because it is a quick and inexpensive way to solve complicated concerns.

The process will typically take anywhere between 12-14 months from the time the claim was filed, but the timeframe will vary depending on certain factors (# of involved parties, complexity of issues, personal schedules, volume of necessary discovery) and can be expedited in special circumstances (due to medical concerns or age). The first step is to file a Statement of Claim with FINRA. This will include the details of the dispute, including identifying the Claimant (who filed the claim) and Respondent (who the claim is against), and the type of damages requested. The Claimant must also file an Arbitration Submission Agreement and pay a filing fee, which depends on the amount of the claim, number of discovery motions, number of hearing sessions and any postponements. Next the claim gets served to the respondent(s), who then file an “answer” which specifies any relevant facts and outlines their defense.

After the answer is received, the arbitrator selection process begins. The Claimant and Respondent are provided lists of arbitrators (generated from FINRA’s Neutral List Selection System) and get the opportunity to evaluate their potential arbitrators and eliminate those they don’t want on their case. Depending on the dollar amount of the damages requested and parties involved, 1-3 arbitrators may be assigned. Next, you will have a prehearing conference with all parties involved including the appointed arbitrators to determine the timelines for discovery, briefing & motions, and evidentiary hearing dates.

After all discovery and any motions have been filed it is time for the actual hearing, which is similar to a normal trial where the Claimant will try and prove their claim and the Respondent will try to defend their position. The hearing will typically include testimony from involved parties and any witnesses, and reviewing any evidentiary documents. After the hearing arbitrators will then deliberate and render their decision of award, which is issued within 30 days. There is no appeals process offered through FINRA, but district courts do have the power to overturn an arbitration award under certain circumstances. Brokerage firms & brokers then have 30 days to pay you, or they risk suspension by FINRA.

This is a highly simplified version of the securities arbitration process, intended to give a general overview of how to collect damages through arbitration. To learn more or to have your case evaluated for free by legal experts, please contact The Hanley Law.

Common Sales Pitches Used in Investment Scams

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which describes common sales pitches used in investment scams.

Investment fraudsters make their living by making sure the investments they pitch sound good and true. Additionally, fraudsters tailor their pitches to the investor by first gaining background information on the investor and using that information to lure them in. FINRA has identified the following five (5) most common sales pitch tactics:

  1. Phantom Riches Tactic: Entice investors with promises of wealth.
    2. Source Credibility Tactic: Build credibility with claims of having expertise, experience and being from a reputable firm.
    3. Social Consensus Tactic: Lead investors to believe that other savvy investors have already invested.
    4. Reciprocity Tactic: Offer to do a small favor for investor in return for the investor doing a large favor.
    5. Scarcity Tactic: Create a false sense of urgency by claiming limited supply of product.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues New Investor Alert, Avoiding Investment Scams

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which describes common types of tactics employed by fraudsters to solicit investors. FINRA advises of the following seven (7) red flags investors should look out for:

  1. Guarantees: Be wary of anyone who predicts how investments will perform.
    2. Unregistered Products: Many investments scams involve unlicensed individuals selling unregistered products.
    3. Overly Consistent Returns: Investments that provide steady returns regardless of current market conditions.
    4. Complex Strategies: Avoid anyone who cannot clearly explain their investment technique.
    5. Missing Documentation: A stock should have a prospectus or offering circular, if not the product may be unregistered.
    6. Account Discrepancies: Unauthorized trades, missing funds or other problems with your account statements could indicate churning or fraud.
    7. Pushy Salesperson: No reputable investment professional should push you to make an immediate decision about an investment.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

Identifying Risk Factors that Make Investors Susceptible to Fraud

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which described risk factors that make investors susceptible to investment fraud and provides tips to avoid being scammed.

FINRA has identified the 5 following risk factors for investors falling prey to fraudsters:

  1. Owning high-risk investments.
    2. Relying on friends, family, co-workers for advice.
    3. Being open to new investment information.
    4. Failing to check the background of an investment or investment professional.
    5. Inability to spot persuasion tactics used by fraudsters.

FINRA urges investors to ask questions about investments and investment professionals by doing the following:

  1. Perform a Background Search on the Investment Professional: Ask if the investment professional is licensed to sell you the investment and confirm which regulator issued their license. Additionally, ask if and when their license has ever been revoked or suspended. A legitimate securities salesperson must be properly licensed, and his or her firm must be registered with FINRA, the SEC or a state securities regulator—depending on the type of business the firm conducts. An insurance agent must be licensed by the state insurance commissioner where he or she does business. To verify the investment professional’s response use FINRA BrockerCheck, contact National Association of Insurance Commissioners or contact North American Securities Administrators Association.
  2. Check Out Investments: Ask whether the investment is registered and, if so, with which regulator. Usually companies register their securities before they can sell shares to the public. You can find out whether a product is registered with the SEC by using the EDGAR database. Additionally, you can also use FINRA’s ScamMeter to determine whether an investment might be a scam.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues New Investor Alert, Should You Exchange Your Variable Annuity

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Should You Exchange Your Variable Annuity. The article explains what a variable annuity is, reasons investors should or should not make a section 1035 exchange, what investors should look out for and what regulators do to protect investors.

An annuity is a contract between an investor and an insurance company. The investor buys the annuity and the company promises to make periodic payments to the investor. There are three types of annuities, fixed, variable and equity-indexed. Fixed annuities are guaranteed a payout, variable annuities payouts depend on the investments chosen and equity-indexed annuities payouts vary, but typically not as much as a variable annuity.

Variable annuities are securities registered with the Securities and Exchange Commission (SEC) and their sales are regulated by the SEC and FINRA. These annuities may impose numerous fees when you invest in them, including surrender charges, mortality and expense risk charges, administrative fees, underlying fund expenses and charges for special features.

An investor might choose to make a Section 1035 Exchange because of new developments in annuity features, including an increase in investment options, less expensive variable annuity contracts, and enhancement of death and living benefits.

However, Section 1035 Exchanges are not always a good idea for investors. FINRA listed the following reasons why investors should not take part in the exchanges:

1) The credits offered are usually offset by the insurance company adding other charges.

2) Contract provisions, such as surrender charges, expire with an existing contract. New charges could be imposed with a new contract or may increase the period of time for which the surrender charge applies.

3) There could be higher charges, like annual fees for the contract.

4) The costly features might not benefit the investor.

5) The broker usually gets paid a higher commission for a variable annuity, compared to the sale of a stock, bond or mutual fund.

Prior to making a Section 1035 Exchange an investor should learn all the facts to determine if the exchange will benefit them. An investor should only exchange their investment when it benefits the investor, not just the financial advisor.

Financial Advisors and Insurance Agents must provide all information to the investor. The advisor or agent should offer the exchange only if it is determined that it could benefit the investor after conducting a review of the investor’s personal and financial situation and needs, tolerance for risk and financial ability to pay for the contract. This suitability obligation is based on FINRA Rules.

Several states and brokerage firms require forms to reflect customer acknowledgement of a replacement transaction. Such forms should provide a comparison of features and costs of an existing contract to the proposed contract and detail what is needed to make the exchange.

FINRA and the SEC have conducted special sales practice examinations that focus on the sales of variable contracts, annuities and life insurance products. The results indicated that some advisors and agents recommended unsuitable products for their customers and the firms did not properly supervise their employees to prevent the unsuitable recommendations.

Furthermore, FINRA points out that unsuitable sales of variable contracts are routinely investigated. Therefore, it is important for the investor to do research and protect their assets.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA- Before You Invest, Working With Your Investment Professional

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The Financial Industry Regulatory Authority (FINRA) issued an article titled Working With Your Investment Professional which provides tips to promote a productive relationship between customers and financial advisors.

FINRA has identified the following 10 tips for customers:

  1. Review the background of any investment professionals you work with or are considering working with. This can be done by using FINRA’s BrokerCheck.
    2. Be clear in your investment goals and risk tolerance with your financial advisor.
    3. Prior to investing, research the product.
    4. Discuss fees with your financial advisor. Fees include commissions, costs associated with the sale of an investment, or management charges.
    5. Review and retain you monthly account statements, confirmations and other correspondence.
    6. Contact your financial advisor immediately if you have questions or concerns about an investment. Additionally, contact the firm’s compliance department if you are unhappy with you financial advisor’s response.
    7. Be wary of exaggerated claims about an investment.
    8. Be wary of financial advisors who pressure you to invest quickly or do not provide you sufficient information about the investment.
    9. Never send money to a firm or financial advisor that you are hearing from for the first time.
    10. Contact the firm’s compliance department in writing if you suspect improper business conduct. Additionally, retain a copy of your complaint and in responses the firm sends.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article Titled Before You Invest, Suitability: What Investors Need to Know

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The Financial Industry Regulatory Authority (FINRA) issued an article titled Suitability: What Investors Need to Know which provides investors with a guide to understanding their investment profile.

FINRA’s suitability rule (FINRA Rule 2111) is based on the requirement that brokerage firms and their brokers, financial advisers or financial consultants deal fairly with their customers. In compliance with FINRA’s suitability rule (FINRA Rule 2111) brokerage firms and their associated persons “must have a reasonable basis to believe” that a transaction or investment strategy involving securities is suitable for the customer prior to making such a recommendation. The firm’s reasonable belief must be based on information obtained through the brokerage firm’s obligation to recommend securities or transactions that are suitable for the investor based on the investor’s:

  • age
    • other investments
    • annual income
    • liquid net worth
    • tax status
    • investment objectives
    • investment experience
    • expected time to reach financial goal
    • liquidity needs
    • risk tolerance

To help ensure that investors receive suitable investment advice, firms and their associated persons are required to diligently learn about a customer’s investment profile before recommending a transaction or investment strategy. Therefore, the suitability rule places an obligation on the brokerage firm and the firm’s associated person(s) to seek information from the customer prior to recommending a security or transaction.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of unsuitable investment recommendations. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article on Common Investor Problems

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The Financial Industry Regulatory Authority (FINRA) issued a new article called Common Investor Problems and How to Avoid Them. The article discusses the four most reported investment problems and provides steps investors can take to avoid them.

Listed below are summaries of the common problems, how to detect them, and how to avoid them.

  1. Misrepresentation: This is when the advisor makes untrue statements or omits information in regards to the investment. The problem is usually detected when the investor reviews prospectuses, account statements, confirmations and other documents or suffers a decline in their investment account. In order to avoid this problem, investors should understand the products they are investing in, ask the advisor to send them information on the investment and keep notes of their conversations with their advisor.
    2. Cold-Calling: This is when investors receive unwanted phone calls from advisors and the advisors use high-pressure sales tactics to solicit the investor to purchasing a product. Usually a cold-call consists of an advisor calling frequently, pressuring the investor to move quickly, asking the investor to sell a well-known security for an obscure product and/or using a three-call system to entice a buy. Investors can avoid cold-calls by asking the cold-call firm to add them to their “do-not-call” list, being wary of sales pitches, conducting a FINRA BrokerCheck on the advisor and firm and/or visiting the firm prior to sending money for the investment.
    3. Unsuitability: A suitability problem occurs when an advisor purchases an investment that is inconsistent with the investor’s objectives and investing profile. The problem can be detected by the investor reviewing their account and researching the investment or another professional pointing out the suitability issue. To avoid a suitability problem, an investor should read and understand all account documents, understand the investment, provide the firm with accurate data regarding income and risk tolerance and keep records of conversations with the advisor.
    4. Unauthorized Trading: This problem occurs when an advisor makes a purchase in an investor’s account without the investor’s knowledge or authorization. The problem is usually detected when the investor reviews his or her confirmations and statements and discovers an unknown product. To avoid unauthorized trading investors should review and retain all documents received from their brokerage firm, document all conversations with advisors and always repeat clear instructions to their advisor.

FINRA also suggests that investors should research investments prior to purchase and act quickly if you believe you have been wronged.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article Titled Prohibited Conduct

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The Financial Industry Regulatory Authority (FINRA) issued a new article called Prohibited Conduct. The article lists 13 actions that are prohibited in the securities industry. These actions include the following:

  1. Recommending unsuitable investment products based on the investor’s profile, objectives and risk tolerance.
    2. Making purchases or sales without the knowledge of the investor, unless the advisor received discretionary authority.
    3. Moving an investor from one mutual fund to another when there is no legitimate purpose.
    4. Misrepresenting and/or failing to disclose information to the investors in regards to an investment.
    5. Removing funds or securities without the knowledge of the investor.
    6. Charging the investor excessive mark-ups, markdowns or commissions on their investments.
    7. Making price predictions, promising investors they will not lose funds or agreeing to share in any losses of the investor’s account.
    8. Securities transactions that violate FINRA’s rules, these are usually private transactions between the advisor and investor in which the firm has no knowledge.
    9. Placing an order for the firm’s account before entering a customer’s limit order when there is no legitimate purpose.
    10. Failure by a market maker to display an investor’s limit order in its published quotes when there is no legitimate purpose.
    11. Not using due diligence when executing an investor’s order, this includes executing at the best price.
    12. Purchasing or selling an investment while in possession of non-public information about an issuer.
    13. Using fraudulent methods to elicit a transaction or induce the purchase or sale of and investment.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.