When an investor suffers harm, including investment losses, due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. The case will be presented and defended in an arbitration proceeding to a panel of arbitrators instead of a court of law in front of a judge and jury.
Arbitration is the primary forum for resolving disputes between investors and brokerage firms or financial advisors because the parties have contractually agreed to use arbitration as an alternative dispute resolution process. When an investor opens an account with a broker-dealer, the investor is required to sign an array of account opening documents. These account opening documents regularly include an arbitration clause, which requires that arbitration be used as an alternative to litigation. This requirement is often a contractually binding obligation for both parties. As a result, disputes between investors and financial advisors or brokerage firms are resolved in arbitration as an alternative to court.
The Financial Industry Regulatory Authority (FINRA) is authorized by Congress to regulate the financial services industry and operates the largest arbitration forum for securities disputes. Most securities arbitrations take place using FINRA’s Dispute Resolution Services’ arbitration forum because, as FINRA members, financial advisors and brokerage firms are required to arbitrate customer complaints upon the filing of a claim through FINRA.
Brokerage-firms and financial advisors are required to have a customer’s best interest in mind when they make investment recommendations or offer investment advice. Unfortunately, that is not always the case. Instead, financial advisors or broker-dealers often recommend unsuitable investments, withhold or misrepresent material information, place their financial interests ahead of the investors, or trade without authorization. The result of this negligent conduct or fraud can lead to investment losses.
According to FINRA’s latest statistics, here are the top 15 security types in 2020 arbitrations filed by customers against their brokerage firms or financial advisors:
- Real Estate Investment Trust.
- Common Stock.
- Private Equities.
- Business Development Company.
- Mutual Funds.
- Options.
- Municipal Bonds.
- Limited Partnerships.
- Municipal Bond Funds.
- Annuities.
- Exchange-Traded Funds.
- Variable Annuities.
- Corporate Bonds.
- 401(k) Accounts.
- Government Securities.
Initiating a securities arbitration can be daunting for any investor, regardless of sophistication and net worth. Investors may also be deterred from filing a securities arbitration claim because of unfamiliarity with the forum or costs involved in pursuing a claim. Iorio Altamirano LLP is here to help.
Iorio Altamirano LLP is a securities arbitration law firm based in New York City. We are experienced securities arbitration attorneys, and we represent investors nationwide who have suffered investment losses as a result of wrongful conduct by financial advisors and brokerage firms. We offer a bold approach and aggressively pursue the recovery of investment losses on behalf of our clients. We are investor advocates.
If you believe that you may have been a victim of securities fraud or other wrongful conduct by your financial advisor or brokerage firm, contact our experienced securities arbitration attorneys for a free case evaluation.