If you spend long enough within the world of investing, you will no doubt run into an investment dispute. When this occurs, many newer investors are unsure about what they should do and so as a result end up accepting a bad situation. However, there is a way of settling an investment dispute in an objective and fair manner.
The process of security arbitration is used to solve the majority of disputes between investors and their brokers and brokerages. Securities arbitration is designed to offer a number of benefits to customers who feel that they have been mis-sold a particular security or investment.
For one thing, that securities arbitration process is both quicker and cheaper than litigation through a court. It also places a much lesser burden on the individual who is bringing forward the case for arbitration. They will have to spend less money on attorneys fees, as well as having lower upfront costs to shoulder. If you have an investment dispute that needs settling then hire a good securities arbitration attorney.
Many of the attorneys who take up investment disputes and securities arbitration operate on contingency agreements which means that the client doesn’t have to pay them any money unless they are able to recover a payout. Securities arbitration proceedings are designed to be streamlined and conclude quicker than usual court litigation.
Any investment disputes that concern a loss of investment, or similar misconduct, must be resolved through the Financial Industry Regulatory Authority (FINRA) who have their own arbitration process. This process was first introduced in August 2007 when FINRA subsumed the regulatory duties of the New York Stock Exchange and National Association of Securities Dealers.
FINRA is, therefore, a self-regulatory organization who has assumed responsibility for settling disputes that arise between investors, their investment firms and other employees. FINRA, in turn, is overseen by the SEC.
Registered Investment Advisor Arbitration
If the investor dispute concerns an account that is managed by Registered Investment Advisors, they are handled through a separate resolution process. These resolution processes are designated by the Investment Advisory Agreement that is signed by both the investor and their advisor.
The activity of RIAs is supervised either by the SEC or state regulators. Which of these does the supervising will depend on the total number of combined assets that the advisor is managing. In most cases, any disputes relating to losses in accounts managed by an RIA are either taking up by a non-FINRA dispute process or are settled in a courtroom.
If you have an investment dispute that needs settling, you will want the process to be handled by someone who is independent. Fortunately, the SEC has laid out clear rules regarding the regulation of financial services, these rules protect investors from fraud and other acts of malice. If you find yourself with an investment dispute, you should immediately consult with an attorney who specializes in securities arbitration. They will be able to walk you through the resolution process and will give you the best chance possible of recouping your losses.