When Brokers Should Call a FINRA Defense Attorney

When Brokers Should Call a FINRA Defense Attorney

finraaaAccording to the results of a recent Gallup poll, stockbrokers rank along with members of Congress, car salesmen, and marketing executives as the least-trusted professionals in America.

So, it’s not surprising then that investors tend to blame their brokers or the brokerage firms that employ them when they unexpectedly lose money on an investment, even if it has nothing to do with the broker’s actions.

As a general rule, the greater the financial loss, the more likely it is the client will attempt to recover loses with allegations of stockbroker misconduct.  And when they do, it may be time to call a FINRA attorney.

What Might They Say?

From churning (excessive trading) to simple negligence, there are dozens of different types of misconduct a broker or brokerage firm may be accused of committing against clients. The danger for the broker is that most of these offenses are open to the subjective interpretation of both clients and those that would hear their allegations.

For example, there is no clear-cut definition of what churning actually is. If they trade infrequently, some clients might consider two trades in a single day excessive, while others might consider it a perfectly normal. But when investors lose big and emotions run high, laying blame becomes a predictable, even natural response.

When to Get the Lawyers Involved

The most common reason aggrieved investors give for considering legal action when losses mount is that their stockbrokers refuse to listen to them. In many cases, the anxious client simply wants to get to the bottom of the issue and understand why they lost out in an investment.

In these instances, it is always advisable for the broker or his manager to explain the situation by answering any questions the client might have. However, if the client starts casting blame on others and accusing them of misconduct, the broker must consider the legal ramifications of continuing the conversation with the indignant investor without an attorney present.

How Can a FINRA Defense Attorney Help?

More often than not, an arbitration lawyer is contacted after the former client has filed a Statement of Claim with the Financial Industry Regulatory Authority Inc., (FINRA). This document initiates the securities arbitration process by informing FINRA that the plaintiff or claimant suffered some wrongdoing at the hands of the defendant or respondent. The broker or brokerage firm must respond to this statement with their own legal document aptly known as an Answer.

What to Expect During Arbitration

Because nearly all brokerage contracts contain an arbitration clause, most are handled via the alternative dispute resolution (ADR) process. The most common types of ADR are arbitration and mediation, both of which are generally less costly and more expeditious than court trials.

But contrary to popular belief, ADR is not a walk in the park. These cases are often every bit as exhaustive as a regular trial. The only real difference is that they take place in a less formal setting that is closed to the public. As a result, legal representation is a must.

How can a Defense Attorney Help

Whether the allegations have merit or not, an ADR attorney will prepare for an arbitration hearing or mediation meeting the same way he prepares for court. That means handing discovery, writing opening and closing statements, and interviewing witnesses. An experienced ADR attorney should be able to save you beaucoup bucks on legal fees by either settling the cases before it goes to deliberation or winning it outright.

If you think it might be time to contact a FINRA attorney, then it probably is.  And if there’s any doubt in your mind, you lose nothing by having a free consultation that will help you determine whether you need to move forward with an attorney or not.





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