unethical activity. The Office of the Whistleblower
was established to expedite the review of high-risk tips by FINRA senior staff
to ensure a rapid response for information believed to have merit.
Investors may also file their complaints with the
appropriate regulatory authorities, such as the Securities and Exchange
Commission (SEC), state securities commissions, or one of the self-regulatory
organizations (SROs) listed in the SRO Directory. The regulator may then
investigate the complaint and, if warranted, can censure, fine, or suspend that
organization. However, the investigation most likely will not recover the
investor’s losses.
The
process of arbitration differs among cases. Here are the main, but not
complete, steps of arbitration.
Initiating the Arbitration – A request is made by one party for a
dispute to be settled through arbitration.
Appointment of the Arbitrator – Arbitrators may be appointed by one of
three ways: directly by the disputing parties, by existing tribunal members, or
by an external party.
Conduct
a Preliminary Meeting – It is beneficial to have a meeting
between the arbitrator and the parties, and their legal council to look over
the case in question and discuss an appropriate process and timetable.
Statement of Claim and Response – The claimant sets out a summary of the
matters in dispute in their own words and the reasoning and remedy sought in
the decision. This is needed to inform the respondent of what questions needs
to be answered. It summarizes the alleged facts, but does not include the
evidence through which facts are to be proved. The statement of response from
the respondent – the broker or firm with whom you have the dispute with – is to
admit or deny the claims.
The respondents will use the Statement of
Claim to prepare their case and be prepared to prove each of your statements.
There may also be a counterclaim by the respondent, which in turn requires a
reply from you, the claimant. These statements are called the “pleadings.” Their purpose is to
identify the issues and avoid surprises. Remember to include all of the information
because most of the brokerage firms have large legal departments and legal
firms to argue that your case is false.
The
Submission Agreement will also need to be filed and states that you have
selected arbitration as the means to solve the dispute and that arbitration
cannot begin without it. The agreement also says that you are bound by the
decision made by the arbitrators.
Discovery and Inspection Procedures – These are legal procedures where the
parties investigate background information. The discover procedure is when each
party must provide all of the relevant documents to plead their case. Parties
then “inspect” the discovered
documents and a selection of documents is given to the arbitrator. The written
evidence is distributed among both parties and is then given to the arbitrator
to review before the hearing. Keep in mind that the respondent may also file a
claim against a third party, or file a counter claim against you.
If your claim is for $25,000 or less, it is considered
a “small claim” and in most cases, a
single public arbitrator will render a decision by reviewing the written
statements and other materials submitted by each party. However, you may
request an in-person hearing where you offer a live testimony instead of having
the arbitrator render a decision based on the written submissions of the
parties.
In
cases where the claim is more than $25,000 or if you request an in-person
hearing, the hearing will be scheduled as soon as possible. Hearings are
conducted in sessions of up to four hours, usually with two sessions per day,
though not necessarily on consecutive days.
Arbitration Hearing – The arbitrator listens to any oral
statements, questioning of witnesses and can ask for clarification of any of
the provided information. Both parties are allowed to put forward their case
and be present while the other side states their information. You will be able
to object to any evidence presented by the other party before the arbitrators
review the evidence. A hearing can be avoided if the issues can be resolved
entirely from the documents.
Legal Submissions – The lawyers of both parties give the
arbitrator a summary of their evidence and information on applicable laws.
These submissions are made either orally at the hearing, or put in writing once
the hearing is complete.
written by Bradford Richdale
copyright Brad Richdale TM 2010 all rights reserved
story also found at Brad Richdale Customer Reviews
written by Bradford Richdale
copyright Brad Richdale TM 2010 all rights reserved
story also found at Brad Richdale Customer Reviews
