What is FINRA Securities Arbitration?
Most brokerage firms almost universally, require their customers to contractually agree to submit all disputes arising in connection with their securities account to binding securities arbitration before the Financial Industry Regulatory Authority (or “FINRA”) Office of Dispute Resolution, which is a forum where these claims are required to heard or adjudicated by a Panel of Arbitrators, as opposed to a trial before a judge, who determines the law, and a jury, which determines the facts, in Court.
FINRA is a Self Regulatory Organization, which all securities broker-dealers or brokerage firms and their associated persons or stockbrokers are required to be registered. FINRA is the product of a merger of what was formerly NASD Regulation, Inc., the New York Stock Exchange, and the American Stock Exchange.
Securities broker-dealers or members and their associated persons, as a condition of membership, are required to consent to the the arbitration of all eligible claims involving public customers, and in fact, evern claims with other securities dealers, under the FINRA Code of Arbitration Procedure. The agreement to arbitrate is customarily found in all securities broker-dealer or brokerage new account agreements, margin agreements, option agreements, and may also appear on the back of most monthly customer account statements.
By agreeing to arbitrate all disputes between you and your stockbroker in arbitration, you are giving up your constitutional right to a trial before a jury. Courts, almost without exception, will enforce these agreements against investors and against securities broker-dealers or brokerage firms and their associated persons.
FINRA Securities Arbitration has its critics, and is often referred to as Wall Street’s secret court. While final arbitration awards are published by FINRA, unlike a court of law, investor complaints or lawsuits, and all the documents or pleading associated with a case are not part of the public record. Investors do not get their “day if court” or the opportunity to try their case before a jury of individuals. Instead, investors are required to arbitrate their case before a Panel of FINRA arbitrators, who issue a decision or Award, which absent some very narrow circumstances, is virtually unappealable in Court. In fact, arbitrators are not required, unless the parties agree. to provide an explained award or disclose the reasons underlying their decision.
Arbitration clauses deprive investors access to the courts and thereby waive a time honored right to sue. The perceived unfairness of arbitration, and particularly, the “unwillingness” of the judiciary to earnestly examine “egregious” arbitration awards, has motivated Congress to seek to make these arbitrations “voluntary.”
A searchable database of FINRA Arbitration Awards may be found here.
However, securities arbitration is, in fact, a quick or expedient, fair and cost effective method of resolving disputes. Costly discovery and deposition practice, under most circumstances, are avoided in securities arbitration. Securities arbitration panels, for the most part, are familiar with most securities related issues, and claims against stockbroker and investment professionals for securities and investment fraud.
In any event, following the Supreme Court’s holding in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987), courts will enforce agreements to arbitrate securities disputes between public customers and stockbrokers and their firms.
The Legal Background and Policy of Arbitration
As stated above, all securities brokerdealers are required to be members of a self regulatory organization or SRO. Most securities broker dealers are members of the Financial Industry Regulatory Authority or “FINRA.” FINRA is a self regulatory organization or SRO established under Section 15A of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78o3, and is the product of a merger of two self- regulatory organizations, the New York Stock Exchange (the “NYSE”) and the National Association of Securities Dealers, Inc. (the “NASD”), also known as NASD Regulation, Inc. SEC Release No. 3456145 (July 26, 2007).
FINRA has the authority to exercise comprehensive oversight over “all securities firms that do business with the public” and “has the authority to, inter alia, create and enforce rules for its members in order to provide “regulatory oversight of all securities firms that do business with the public.” Securities and Exchange Commission Release No. 3456145, 72 Fed.Reg. 42169, 42170 (Aug. 1, 2007).
Among FINRA’s stated purposes are to “encourage and promote among members observance of federal and state securities laws”; “[t]o investigate and adjust grievances between the public and members and between members”; and “[t]o adopt, administer, and enforce rules of fair practice.” Restated Certificate of Incorporation of Financial Industry Regulatory Authority, Inc. § 3 (July 2, 2010). Upon joining FINRA, a member organization agrees to comply with FINRA’s rules. See FINRA Bylaws Art. 4 § 1. FINRA Rule 12200 provides that:
Parties must arbitrate a dispute under the Code if:
(1) Required by a written agreement, or
(2) Requested by the customer; and
The dispute is between a customer and a member or associated person of a member; and the dispute arises in connection with the business activities of the member or the associated person, except disputes involving the insurance business activities of a member that is also an insurance company.
Why Your Brokerage Firm Is Required To Arbitrate
FINRA Rules are “contractual in nature” and are binding on its members. The arbitration rules of the New York Stock Exchange are binding on NYSE members.
Some courts have held that even the “existence” of a separate “written agreement to arbitrate” is not required to compel a member to arbitrate. The Code is sufficient in and of itself to compel arbitration of covered claims against one of its members or associated persons in the absence of a customer agreement with an arbitration clause.
FINRAmembership constitutes an agreement to arbitrate disputes under FINRA’s rules. A customer under the exchange’s rules is entitled to invoke the arbitration provision “as an intended thirdparty beneficiary” in a dispute with a member. Compulsory arbitration rules constitute an agreement in writing under the Federal Arbitration Act.
Even if there is no direct written agreement to arbitrate with a brokerdealer or associated person, the FINRA Code, which requires all members to arbitrate, is binding on its members. Under the Code, at least as construed by the courts, every individual investor, corporation, partnership, trust, pension plan, institution, state, municipality, or other government, authority conducting business with a brokerdealer or its agent, is a “customer.”
Even investment advisors may be public customers. The FINRA Code merely states only that “[a] customer shall not include a broker or dealer.” FINRA Rule 12100(i). FINRA’s glossary states that a “customer” is “[a] person or entity (not acting in the capacity of an associated person or member) that transacts business with any member firm and/or associated person.” As one Court has observed, the meaning is plain.
It provides that the party is a customer as long as [he, she it] is not a broker or dealer; nothing in the Code directs otherwise or requires more. Enforcing the limitation the securities firm seeks would be tantamount to reading language into the Code that is conspicuously absent. When Rule 12200 was proposed, the addition of the words “of a member”’ after the word “customer” was explicitly rejected because it would “narrow the scope of claims that are required to be arbitrated under the Customer Code.”
The Second Circuit has also suggested that the term “customer” is intentionally broad because FINRA intended to require its members to arbitrate disputes with the full array of parties as part of its “investor- protection mandate” and rejected the contention that FINRA has a narrow “investor protection mandate,” such that ‘customers’ should include only those receiving “investment or brokerage services.”
Indeed, many commentators suggest that the term “customer” has been construed broadly to include all members of the “investing public.” as part of FINRA and the NASD’s express purpose “[t]o investigate and adjust grievances between the public and members and between members.” Restated Certificate of Incorporation of Financial Industry Regulatory Authority, Inc. § 3 (July 2, 2010)(emphasis added); See also, David E. Robbins, Securities Arbitration Procedure Manual § 5 6(i) (5th ed. 2009); Norman S. Poser & James A. Fanto, BrokerDealer Law and Regulation § 28.07(A) (4th ed. 2009).
In cases where, persons associated with the member firm, hold themselves out on their business cards, stationary, promotional materials, and their internet sites as offering securities through the member, courts will find that those persons are “customers” of the member. See, e.g. Multi-Financial Securities Corp. v. Brown, 2002 U.S. Dist. LEXIS 26527 (E.D. Pa. December 20, 2002)(“For example, the record includes a letter written by the broker to the investor written on his company’s stationary stating “Securities offered through MultiFinancial Corp. Member SIPC and NASD.”
In addition, claims against a securities brokerage firm for the failure to supervise their registered representatives whom may be separately engaging in illegal or wrongful conduct is subject to arbitration.
A dispute that arises from a firm’s lack of supervision over its brokers arises in connection with its business. A dispute that arises from a securities brokerage firm’s lack of supervision over its brokers arises in connection with its business. Accordingly, all member broker dealers, and their associates or registered representatives are subject to the arbitration of customer claims.
Customers are also generally bound by arbitration. Owners or beneficiaries of non individual entity customers are generally bound by arbitration, and several courts have held that agreements to arbitration securities disputes are so universal that when questions as to whether a party actually entered into an agreement arise, a party’s agreement to arbitrate may be implied from that parties conduct.
However, in arbitration, unlike in court, motions to dismiss, in advance of an evidentiary hearing are very limited. In arbitration, the parties are provided the opportunity to submit pertinent evidence in support of their claims or defenses.
Courts have held that it would present issues of fundamental fairness if a final award were issued without the development of an additional record on the merits.” In fact, if an arbitrator refuses to hear material and pertinent evidence, prejudicing one of the parties, the award may be set aside. In arbitration all parties are entitled to an opportunity to be heard and must be allowed to present evidence without unreasonable restriction.
Presently, there are very limited circumstances under which an investor complaint or statement of claim can be dismissed in advance of an evidentiary hearing. Former Rule 10305 of NASD Code of Arbitration Procedure used to provide that “[a]t any time during the course of an arbitration, the arbitrators may either upon their own initiative or at the request of a party, dismiss the proceedings.” This Rule was formally abolished in January 2009, however, some background may be instructive.
In June of 2005, the Securities Industry Association sought to amend what is now Rule 10305 to permit the dismissal of Customer Arbitrations prior to an evidentiary hearing. (SEC Release No. 34 51936). The proposed rule flatly failed, and was never heard from again, until September 2007. In September 2007, FINRA proposed amendments to Rule 10305 which were “designed to limit significantly the number of dispositive motions.”
In September 2008, the Securities and Exchange Commission approved FINRA’s proposed New Rule, Rule 12206 of the Code of Arbitration Procedure, which became effective January 23, 2009. Under the New Rule, prehearing Motions to Dismiss are limited to three circumstances on which to grant the motion: if the parties settled their dispute in writing; “factual impossibility,” meaning the party could not have been associated with the conduct at issue; or the existing 6year time limit on the submission of arbitration claims.”
However, in connection with the promulgation of the new Rule, “FINRA emphasize[d] that these exceptions do not constitute an invitation to parties to file motions to dismiss.” See, Regulatory Notice 0907 (Jan. 23, 2009)(“SEC Approves New Motion to Dismiss Rule and Amendment to the Eligibility Rule in Arbitration”).
How To Get Started
Securities Arbitration begins with the filing of a Statement of Claim by the Claimant, against the other party, typically their broker and/or brokerage firm, the Respondents.
A Statement of Claim should set forth the factual and legal reasons as to why you belief you are entitled to relief against your stockbroker or investment professional for securities fraud or breach of fiduciary duty.
Although there are no formal pleading requirements in securities arbitration, the Statement of Claim, in substantial part, is the equivalent of a Complaint that would otherwise be filed in federal district court. The cost of filing a Statement of Claim depends on the amount of the claim.
Filing fees range from $600 to $2,250, pending on the dollar amount of your claim or the amount in controversy. FINRA or the Financial Industry Regulatory Authority offers approximately 48 hearing locations geographically disbursed throughout the United States.
The location or situs of a hearing is usually based on the nearest location to the customer at the time their account was opened or where they resided at the time the transactions or the events giving rise to their claims occurred. Service of the initial pleading or Statement of Claim is made by FINRA on its members.
Under the Code of Arbitration Procedures, public customers are not required to arbitrate claims against former FINRA members who have been expelled or have had their registrations revoked. Respondents, the offending brokerage firm and/or stockbroker, are provided with 45 days from the service of the Statement of Claim to respond. Answers or Responses typically contain Respondents’ version of the facts, and the legal reasons why the customer is not entitled to relief, or why the claim ought to be dismissed.
Sometimes, Answers or Responses may contain copies of important documents, including correspondence or e-mails, demonstrating why the facts are different than as alleged in the Statement of Claim.
Thereafter, generally, in arbitrations before FINRA, after Respondents enter their appearances, the parties are provided arbitrator selection materials. Each party is provided with certain biographical information, including the educational and employment background, for each proposed arbitrator.
Interests and potential conflicts are sought to be disclosed, and previous Awards decided by that arbitrator are also available for review. From these lists and summaries, parties rank, in order of preference, prospective arbitrators.
A Party may strike, without cause, those persons that they do not wish to serve on their Panel. If the Parties do not agree on proposed arbitrators, or all available arbitrators are stricken by both Parties, FINRA will assign an available arbitrator, whom can only be removed or challenged for actual cause or a conflict of interest. Customer cases involving claims in excess of $100,000 are typically heard by a Panel of three individual arbitrators, which at the customer’s option may include an industry arbitrator.
Public arbitrators are typically lawyers, retired judges, professional mediators, and other individuals. Industry arbitrators are individuals with a current or recent affiliation with the securities industry, and for the most part are registered representatives, retired registered representatives, branch managers, analysts, accountants, floor traders, or support personnel.
Once a Panel is appointed, a pre-hearing conference is held where the parties and the Panel scheduled final hearing dates, discovery deadlines, and other administrative matters. Discovery and the means to obtain relevant evidence in arbitration is very important.
In November 1999, FINRA adopted a specific Discovery Guide setting forth those documents and information that are discoverable in customer cases. Generally, depending on the issues in any particular case, customers should preserve and be expected to produce all written communications between them and their broker, all documents relating to any other securities accounts, together with their tax returns for a period of at three years before they opened their account to the date they filed their Statement of Claim.
Customers are also expected to provide detailed information relating to their business interests, education, and financial condition. Among other things, brokerage firms are expected to produce all documents relating to their customer’s account, including new account forms, customer statements, confirmations, and communications between the customer and their stockbroker.
Records of complaints or disciplinary action against your broker should also be made available together with information and documents relating to the brokerage firm’s supervision of your individual broker, the broker’s training, and the brokers basis of compensation should also be produced by the brokerage firm in most cases.
In connection with the recommendation of any particular security, the broker or brokerage firm is also obligated to produce documents relating to the basis of any such recommendation, if any, along with information relating to any business relationship with the issuer. While parties are not required to be represented by counsel, arbitration is very much a legal, courtroom-like, proceeding, where, in most cases, parties should be represented by competent counsel.
All testimony is given at the time of a final hearing. Parties have the right to make opening statements and summarize what they intend to prove. Parties have the right to call witnesses, and may compel the attendance of nonparty witnesses by Subpoena, by Orders of the Panel, or with the assistance of a state or federal court.
The parties and their witnesses present testimony under oath, and are subject to cross-examination. Documents are authenticated and offered into evidence. Expert witnesses may be called upon to testify and may be cross-examined. Closing arguments are made, and typically, within 30 days, the Panel renders a written Award.
Arbitration Awards are final, and will only be disturbed by a court in very limited circumstances upon the showing of fraud, corruption, or a manifest disregard for the law. Awards against brokers or brokerage firms must be paid within 30 days, or upon application, FINRA may suspend or revoke their licenses and registrations. Unpaid Awards must be docketed, typically in federal court, as a legal judgments in order to attempt to collect or satisfy any such Award.
Discovery and the means to obtain relevant evidence in arbitration is very important.
It is so important because it one of the only basis for seeking to vacate or upset an arbitration award based upon the panel’s refusal to hear pertinent evidence. Discovery is important, however often the securities industry goes to great lengths to conceal or hide pertinent evidence.
Cases are won and lost, or more accurately settled, as a result of discovery. Brokerage firm lawyers will generally, employ every device and ingenuity to avoid the production of highly relevant documents, hidden gems that can be found on inter-office e-mails, responses to exception reports, regulatory submissions, and sometimes documents contained in a broker’s employment files.
These lawyers also, typically, want unbridled discovery into every aspect of a claimant’s personal financial life, commonly referred to as a “financial colonoscopy,” in support the two most traditional defenses: “The You Should Have Know Better than to Trust Us” or “The You Could Afford to Lose the Money Anyway” defenses.
Documents relating to customer’s wealth which the brokerage firm seeks to obtain in support of these defenses are generally irrelevant because the broker did not have this information at the time of recommendation. A registered representative is obligated to make his recommendation only on the basis of concrete information about the client’s financial situation and a representative must make recommendations only on the basis of the concrete information that the customer did supply and not on the basis of guesswork as to the value of other possible assets.
Moreover, subsequent changes in a customer’s financial condition are of no relevance to the suitability of a recommendation at an earlier time. Perhaps more importantly, wealthy investors are allowed to be conservative, and in any event, particularly in defective product cases, a customer’s wealth or sophistication does not absolve the broker for failing to conduct due diligence or have conducted a product specific suitability analysis. Even the most sophisticated investor deserves proper recommendations.
The fact that a customer may be wealthy does not provide a basis for recommending risky investments. Suitability is determined by the appropriateness of the investment for the investor, not simply by whether the salesman believes that the investor can afford to lose the money.
Generally, depending on the issues in any particular case, customers are expected to produce certain documents, including all written communications between them and their broker, all documents relating to any other securities accounts, together with their tax returns for a period of at least three years before they opened their account.
Customers are also expected to provide detailed information relating to their business interests, education, and financial condition. Among other things, brokerage firms were and are expected to produce all documents relating to your account, including new account forms, customer statements, confirmations, and communications between you and your broker.
Records of complaints or disciplinary action against your broker should also be made available together with information and documents relating to the brokerage firm’s supervision of your individual broker, the broker’s training, and in most cases, the brokers basis of compensation should also be produced by the brokerage firm. In connection with the recommendation of any particular security, the broker or brokerage firm also ought to be obligated to produce documents relating to the basis of any such recommendation.
Accordingly, in November 1999, FINRA, then the NASD adopted a specific Discovery Guide setting forth those documents and information that are discoverable in customer cases. However, within the last 10 years, the Discovery Guide, was attempted to be amended at least three times.
The securities industry, understandably, has sought to limit its scope with respect to the documents that it has to produce and increase the burden on customers, requiring the production of documents relating to almost every aspect of their personal financial life. While the Discovery Guide, which was expected to decrease the controversies surrounding discovery, is “guide,” for use in customer cases and is “not intended to remove flexibility from Arbitrators or the parties in a given case.” Executive Summary at 1, often the securities industry objects to the production of documents and information contemplated by the Guide, but then argues that the documents customers are contemplated to produce, must be produced in every case.
In May 2011, FINRA published the newest version of the Discovery Guide, and replaced the prior fourteen Lists with just two Lists of presumptively discoverable documents: one for firms/associated persons to produce and one for customers to produce. Notice to Member 11-17 (May 16, 2011).
The Discovery Guide is now codified under the FINRA Code of Arbitration Procedure Rule 12506.
However, the Discovery Guide is simply a guide. It is extremely useful in cases involving suitability, churning, the failure to supervise, and other generic cases, because it sets forth those categories of documents and information that are presumptively discoverable in cases of that kind.
But the Discovery Guide is merely a guide, and is not “intended to remove flexibility from arbitrators or parties in a given case” and that the parties may request documents in addition to those identified in the production lists.” Notice to Members 11-17 at 2, (Flexibility: The parties and arbitrators retain their flexibility in the discovery process. Arbitrators can: order that parties do not have to produce certain documents on the Lists; and alter the production schedule)(emphasis added).
As stated in the August 2007 revised Arbitrator’s Manual with respect to the Discovery Guide, “Consideration should be given to the type of controversy and the issues involved in a particular case. Before ordering that a party produce a particular document, the arbitrator(s) should weigh a party’s ability to fully develop his/her case against the reasonableness of the burden to produce the document.” (Id. at 12)(emphasis added).
Documents the Firm/Associated Persons Shall Produce in All Customer Cases
Item 1: Account record information for the customer parties, documents concerning the customer parties’ risk tolerance and agreements with the customer parties.
Item 2: Correspondence sent to the customer parties or received by the firm/associated persons, and advertising materials sent to customers of the firm.
Item 3: Documents evidencing any investment or trading strategies used or recommended in the customer parties’ accounts.
Item 4: For claims alleging unauthorized trading, all documents the firm/associated persons relied upon to establish that the customer parties authorized the transactions at issue, all documents relating to the customer parties’ authorization of the transactions and all order tickets for the transactions.
Item 5: Materials the firm and/or associated persons prepared or used and/or provided to the customer parties relating to the transactions or products at issue, and worksheets or notes indicating that the associated persons reviewed or read such documents.
Item 6: Notes the firm/associated persons made relating to the customer parties and/or the customer parties’ claims, accounts, transactions or products or types of products at issue.
Item 7: Notes or memoranda evidencing supervisory, compliance or managerial review of the customer parties’ accounts or transactions, or of the associated persons assigned to the customer parties’ accounts; and correspondence between the customer parties and firm/associated persons relating to the customer parties’ claims, accounts, transactions or products or types of products at issue bearing indications of managerial, compliance or supervisory review.
Item 8: Recordings, telephone logs and notes of telephone calls or conversations about the transactions at issue that occurred between the associated persons and the customer parties, and/or between the firm and the associated persons.
Item 9: Writings reflecting communications between the associated persons assigned to the customer parties’ accounts at issue and members of the firm’s compliance department relating to the securities/products at issue and/or the customer parties’ claims, accounts or transactions.
Item 10: Forms RE-3, U4 and U5 and Disclosure Reporting Pages for the associated persons assigned to the customer parties’ accounts at issue, customer complaints identified in the forms, and customer complaints filed against the associated persons.
Item 11: Sections of the firm’s manuals relating to the claims alleged, including separate or supplemental manuals governing the duties and responsibilities of the associated persons and supervisors, bulletins the firm issued and the table of contents/index to the manuals/bulletins.
Item 12: Analyses and reconciliations of the customer parties’ accounts, including those relating to reviews of the customer parties’ claims, accounts, transactions or the product or types of products at issue.
Item 13: Exception reports, supervisory activity reviews, concentration reports, active account runs and similar documents produced to review for activity in the customer parties’ accounts related to the allegations. For claims alleging failure to supervise, the firm/associated persons must produce the documents listed in this Item that were produced to review for activity in customer accounts handled by associated persons and related to the allegations.
Item 14: Portions of internal audit reports for the branch in which the customer parties maintained accounts that concern associated persons or the accounts or transactions at issue and discussed alleged improper behavior in the branch against other individuals similar to the improper conduct alleged.
Item 15: Records of disciplinary action taken against associated persons by any regulator or employer for all sales practice violations or conduct similar to the conduct alleged.
Item 16: Investigations, charges, or findings by any regulator and the firm/associated persons’ responses.
Item 17: Portions of examination reports or similar reports following an examination or inspection conducted by any regulator that focused on the associated persons or the customer parties’ claims, accounts or transactions, or the product or types of products, or that discussed alleged improper behavior in the branch against other individuals similar to the conduct alleged.
Item 18: Documents related to the case that the firm/associated persons received by subpoena or by document request directed to third parties.
Item 19: For the transactions at issue, documentation showing the compensation, gross and net, to the associated persons.
Item 20: For claims related to solicited trading activity, a record of all compensation, including, but not limited to, monthly commission runs for the associated persons.
Item 21: A record of all agreements pertaining to the relationship between the associated persons and the firm, summarizing the associated persons’ compensation arrangement or plan with the firm. Item 22: For allegations regarding an insurance product that includes a death benefit, information concerning the customer parties’ insurance holdings and recommendations, if any, regarding insurance products.
Documents the Customer Parties Shall Produce in All Customer Cases
Item 1: Customer party federal income tax returns, limited to pages 1 and 2 of Form 1040; Schedules A, B, D and E; and the IRS worksheets related to these schedules, redacted to delete the customer parties’ Social Security numbers. Customer parties may redact information relating to medical and dental expenses and names of charities on Schedule A unless the information is related to allegations in the Statement of Claim.
Item 2: Financial statements, including statements within a loan application, or similar statements of the customer parties’ assets, liabilities and/or net worth.
Item 3: Documents the customer parties received from the firm/associated persons and from entities in which the customer parties invested through the firm/associated persons, including account opening documents and/or forms, prospectuses, research reports, annual and periodic reports, and correspondence.
Item 4: Account statements for each non-party securities firm where the customer parties maintained an account.
Item 5: Documents, including agreements and forms, relating to accounts at the firm or transactions with the firm.
Item 6: Account analyses and reconciliations prepared by or for the customer parties relating to the customer parties’ accounts at the firm or transactions with the firm.
Item 7: Notes, including entries in diaries or calendars, relating to the accounts at the firm or the transactions at issue.
Item 8: Recordings and notes or logs of telephone calls or conversations about the customer parties’ accounts or transactions at issue that occurred between the associated persons and the customer parties, and telephone records evidencing telephone contact between the customer parties and the firm/associated persons.
Item 9: Correspondence the customer parties sent or received relating to the accounts or transactions at issue.
Item 10: Previously prepared written statements by persons with knowledge of the facts and circumstances related to the accounts or transactions at issue.
Item 11: Complaints/Statements of Claim and answers filed in civil actions involving securities and securities arbitration proceedings in which the customer parties have been a party, and all final decisions or awards or non-confidential settlements entered in these matters. If a person is a party to a confidential settlement agreement that by its terms does not preclude identification of the existence of the agreement, the party shall identify the documents comprising the agreement.
Item 12: Documents showing the customer parties’ ownership in or control over any business entity. If the customer parties are trustees, documents showing the accounts over which the customer parties have trading authority.
Item 13: Documents the customer parties received, including documents found through the customer parties’ own efforts, relating to the investments at issue.
Item 14: For claims alleging unauthorized trading, documents the customer parties relied upon to show that they did not know about or consent to the transactions at issue.
Item 15: Materials the customer parties received or obtained relating to the claims, transactions or products at issue, and materials received relating to other investment opportunities.
Item 16: Customer parties’ resumes.
Item 17: Existing descriptions of the customer parties’ educational and employment background if not set forth in resumes.
Item 18: Documents related to the case that the customer parties received by subpoena or by document request directed to third parties.
Item 19: To the extent that an insurance product that provides a death benefit is included in the Statement of Claim, information received from an insurance sales agent or securities broker relating to such insurance.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
Our Practice Areas
The litigation of individual and group investor claims against securities broker-dealers and investment professionals adjuducated in arbitration before the Financial Industry Regulatory Authority.
Defective Financial Products
Alternative Investments, Promissory Notes, Structured Products, High Yield Bond Funds, Non-Marketable Real Estate Investment Trusts, Inverse and Leveraged ETFs, the Failure to Conduct Due Diligence.
Speculative or High Risk Investment Recommendations, Unsuitable Investment Strategies, Low Priced Securities, Customer Specific Unsuitability, Inappropriate Investment Recommendations.
Breach of Fiduciary Duty, Churing, Unauthorized Trading, Fraud, Stockbroker Theft, Ponzi Schemes, the Sale of Unapprovied investments.
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Nicholas Guiliano was successful in winning a case against one of the firms where I had invested. I had a safe investment until a young eager stock broker took over my account and slowly kept putting my money in risky stocks, all while I was on disability. Nick was able to get me a portion of my money back within 2 months. He always was available to speak, and very courteous. I am so grateful to have found Nick. Thank you Nick!Jill I. (Avvo)"Ability To Think Outside The Box"
Nick Guiliano came highly recommended to me and I was very fortunate that he agreed to take my case. His knowledge of the law and his ability to think outside the box amazed me more and more as my case progressed. His aggressive style and total dedication to me and my case gave me the confidence that we were going to prevail and we did. He is one of the few Attorneys that does not finish his work at end of the day. He was always thinking of ways to use his expertise and knowledge on my behalf. On a personal note, he is a very down to earth guy who makes you very comfortable and at ease. He gave me the ability to sleep at night knowing that my case was in his hands. I will always recommend him without any reservations. In my book he is “the Best”Jerry V. (Avvo)"His Ability And Advice Paid Off"
We called Mr. Guiliano after reading his article in Forbes magazine. Although we though the statue of limitations might have run out on our case, we were thrilled when he took our case. Against the odds, he was able to get a settlement for us. He kept us informed and advised us on the proper course of action. We always felt confident with his ability and advice and it paid off. Highly recommend.Cris (Avvo)"Recommend Him Strongly"
I used Mr. Guiliano for a investment fraud case and he did a very good job. I got a good deal of my money back that had been lost due to risky investments I was put into by a prominent company. It was not a really big case, yet Mr. Guiliano was interested and responsive and kept on top of things for me. I would recommend him strongly.Anne H. (Avvo)"Superb Representation"
Mr. Guiliano (Nicholas) represented my mother and I in an investment case where it appeared the agent was preying on elderly people and steering them to improper investments to reap commissions. Mr Guilano did an excellent job of preparing the case and representing us. Although the case settled out of court, it was the best outcome expected for several technical reasons out of his control. He always kept us informed and provided sound recommendations. I would not hesitate to recommend Mr. Guiliano for any investment related case.Bob W. (Avvo)"Somebody you want on your side"
Personable and professional, he is the one to go to when investors are defrauded by Brokerage houses and Investment banks. Somebody you want on your side when things go wrong. He takes personal interest in every case and tries his best. Although I could not recover all my losses due to Fed/SEC action which was beyond his control, I would give Mr. Guiliano full marks on every count. He even worked with my accountants to help me write off losses due to fraud.Ashok N. (Avvo)"More than most lawyers"
Mr. Guiliano is highly accomplished securities lawyer. He helped us secure a wonderful result in case where my husband and I lost almost all our lifesavings. He is also high compassionate, and did more than most lawyers have ever done for us, as he seems that he cares.Mary S. (Avvo)"Awesome Results"
I would like to take this opportunity to express my sincere congratulations for your awesome results. I want to acknowledge my appreciation and respect for their splendid professionalism and knowledge you have shown in handling the laws (previous and present), for arbitration over fraud litigations.Ben S. (Google Business)"Best Of The Best"
I have employed Nick Guiliano personally and on behalf of my clients in the past. Nick is absolutely the best securities lawyer in Philly if not the country. The best of the Best!Ken S. (Google Business)"Finest Litigation Attorneys"
I have been a Corporate Counsel for over 30 years having worked with Banks and large public companies. Nick is one of the finest litigation attorneys in the country.Anthony P. (Google Business)"Fights for his clients like a bull dog"
I contacted Nicholas Guiliano for my 90 year old mother, who lives in Oregon to assist her in recovering from an unscrupulous financial manager who talked her into investing in some very high risk and speculative securities to reap high commissions. Mr Guiliano worked very hard to recover what he could for my mother. He is the best and fights for his clients like a bull dog to uphold their rights and protect their interests. I highly recommend Mr Guiliano and his firm when it comes to securities issues.Robert (Google Business)"Man Of Integrity"
Nick is an incredibly decent Atty. He's a man of integrity, fairness, and honesty. You could see that it's wasn't just me who noticed, it was opposing counsel, at the end of the Zoom! I'm completely impressed with Nick and will keep him in my prayers. Thanks again!Paula (Martindale-Hubbell)"Very Good To Work With"
My case was taken on a contingency basis. Even though it lasted about two years, the Guiliano law firm kept in contact with me, continued to research the case and brought it to a successful conclusion. They were very supportive of me in my first such experience and were very good to work with.Nancy T. (Martindale-Hubbell)"We are so very grateful"
My husband and I were lucky to find Nick after losing a substantial amount of money due to poor investing from a prominent company. He made us feel at ease right away and was always accessible for questions and concerns. Nick and his team were wonderful with gathering up all the pertinent information needed for our case, constantly in contact with us, answering all of our questions, which helped to make the process a lot less stressful. We are so very grateful to have had The Guiliano Law Firm represent us and the fact that they did it on a contingency basis made it possible to follow through. If not for them, we would never have been able to pursue this, financially or emotionally.Stacey B. (Avvo)"Incredibly Resourceful"
Nick was incredibly resourceful and professional. His understanding of securities and investment fraud is unparalleled. He is indeed connected with all the powers to be , and is able to provide intellectual and cogent insights. He is tenacious in fighting for his clients, and will never relent. I was able to follow his recommendations and am glad I did.Mark C. (Avvo)
Frequently Asked Questions
What is FINRA arbitration?
FINRA (Financial Industry Regulatory Authority) arbitration is a dispute resolution process that allows investors and brokerage firms to resolve disputes through a neutral third-party arbitrator rather than through the court system. The arbitration process is governed by FINRA rules and typically involves a hearing where both parties present their evidence and testimony.
FINRA arbitration can be used to resolve a wide range of disputes, including disputes related to securities transactions, brokerage account issues, and claims of fraud or misrepresentation. It is typically faster and less expensive than going to court, and the decision of the arbitrator is final and binding, although there is a limited right to appeal.
Investors have the right to file a claim in FINRA arbitration if they have a dispute with a FINRA-member firm or associated person. The process starts with filing a statement of claim and the respondent has the option to file a statement of answer or a motion to dismiss. After that, the case goes to a hearing where the arbitrators hear evidence and testimony from both parties.
It’s important to note that when you open a brokerage account, you may be asked to sign an agreement that includes a clause mandating arbitration of disputes. This means that if you have a dispute with your broker, you will be required to resolve it through FINRA arbitration, instead of going to court.
What is a FINRA arbitration lawyer?
A FINRA arbitration lawyer is an attorney who specializes in representing clients in disputes that are brought before the Financial Industry Regulatory Authority (FINRA). FINRA is a self-regulatory organization (SRO) that oversees brokerage firms and registered representatives (stockbrokers) in the securities industry.
When a dispute arises between a brokerage firm, stockbroker, or a customer, FINRA provides an arbitration forum for resolving the dispute. FINRA arbitration is a less formal and quicker process than going to court, and it is often a requirement in the customer agreement that a dispute must be resolved through arbitration.
A FINRA arbitration lawyer will have experience and knowledge of the FINRA arbitration process and the specific rules and regulations that apply to disputes in the securities industry. They will be able to advise clients on their rights and options, represent them in the arbitration proceedings, and help them navigate the FINRA arbitration process. They will also be able to help clients to achieve a fair and reasonable resolution to their dispute, whether it’s through settlement or an arbitration award.
Who are FINRA arbitrators?
FINRA (Financial Industry Regulatory Authority) arbitrators are individuals who are selected to hear and decide disputes between investors and securities firms or registered representatives. FINRA is a self-regulatory organization (SRO) that oversees brokerage firms and registered representatives in the securities industry. One of its functions is to provide a forum for the resolution of disputes through arbitration.
FINRA arbitrators are typically individuals with a background in the securities industry, such as former securities industry professionals, attorneys, or retired judges. They are trained to hear and decide disputes in accordance with FINRA’s rules and procedures.
FINRA arbitrators are appointed to hear cases on a case-by-case basis. The parties to a dispute select the arbitrators from a pool of potential arbitrators maintained by FINRA. The selection process is designed to ensure that the arbitrators are impartial and have the necessary qualifications to hear and decide the case.
Arbitrators are not employees of FINRA, but rather, they are independent contractors who are compensated for their services. They are responsible for rendering a decision based on the evidence presented, and the decision is final and binding on the parties.
FINRA arbitration is considered as an alternative to court litigation and is often faster, less expensive and less formal than court proceedings. It is important to note that while the decision of FINRA arbitrators is final and binding, there are some limited grounds for appealing the decision.
How long does FINRA securities arbitration take?
The length of a FINRA securities arbitration can vary depending on a number of factors, including the complexity of the case, the number of parties involved, and the availability of the arbitrators. Generally, the process of FINRA securities arbitration is faster than traditional court litigation, but it can still take several months or even longer.
The process of FINRA securities arbitration typically involves the following steps:
Filing a claim: A claim is filed with FINRA by the claimant, this step is usually done with the help of an attorney.
Discovery: The parties exchange documents and conduct depositions to gather evidence for their case. This can be a time-consuming process, depending on the complexity of the case and the number of parties involved.
Pre-hearing conference: FINRA schedules a pre-hearing conference to discuss procedural issues and to set a hearing date.
Hearing: The hearing is held before a panel of arbitrators, who will hear the evidence and arguments presented by the parties.
Decision: After the hearing, the panel of arbitrators will deliberate and issue a decision. This decision is typically issued within 30 days of the hearing.
In general, the whole process may take anywhere from several months to a year or longer. It can also depend on the availability of the arbitrators, the complexity of the case, and the willingness of the parties to settle the dispute.
It’s important to note that FINRA has implemented some measures to expedite the process and reduce the duration of the arbitration process, such as implementing stricter deadlines for the exchange of documents and evidence, limiting the number of depositions, and scheduling hearings in a more timely manner.
What is FINRA Broker Check?
FINRA BrokerCheck is a public disclosure service provided by the Financial Industry Regulatory Authority (FINRA) that allows investors to research the professional background and qualifications of registered brokers and firms. The service provides information on a broker or firm’s registration and employment history, as well as any disclosures of legal or regulatory actions, customer complaints, or financial disclosures.
The information available on BrokerCheck includes the broker’s current and previous registration and employment history, regulatory actions and customer complaints, and any bankruptcy filings. It also includes arbitration awards and civil judgments, and regulatory sanctions, such as fines or suspension from the industry, and if the individual has been barred from the industry.
This information allows investors to make more informed decisions about who they choose to work with for their financial needs. It is important to note that a clean record does not guarantee that a broker will be free of misconduct in the future.
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