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Are You a Victim of Investment Fraud? Recovering Your Losses May Involve Hiring a Lawyer to Pursue FINRA Arbitration

Investors in the United States have clear legal rights. For example, as an investor, you have a right to receive the information you need to make informed investment decisions, and you have the right to rely on your broker’s investment advice. If you receive misleading information about an investment, if your broker provides unsuitable investment advice, or if you fall victim to any other form of investment fraud, you can—and should—hire a lawyer to file a claim on your behalf.

But where do you file?

Generally, defrauded investors have two main avenues for asserting their legal rights. While some investors will need to take their claims to court, many investors will be able to recover their fraud losses through FINRA arbitration.

Understanding the Differences Between Filing for FINRA Arbitration and Going to Court

FINRA arbitration is an option for investors who have suffered fraudulent losses due to their broker’s or brokerage firm’s misconduct. Under FINRA’s Rules, all brokers and brokerage firms are required to submit to arbitration for the resolution of investor claims. When investors have claims against publicly-traded companies and other entities, this is typically when they will need to go to court to assert their legal rights.

FINRA arbitration and civil litigation in court are very different processes. However, they have one important similarity: Unlike mediation, in which the parties try to work out a mutually agreeable resolution, arbitration, and civil litigation both result in a binding resolution issued by a neutral third party.

Here are some of the key differences between FINRA arbitration and filing an investment fraud lawsuit in court:

  • Timeframe – The timeframe for FINRA arbitration is typically much shorter than the timeframe for civil litigation. While many lawsuits won’t be scheduled for 18 months (or more) after preliminary hearings take place, most FINRA arbitration cases are fully resolved in 16 months or less.
  • Discovery – While both FINRA arbitration and civil litigation involve discovery, the discovery process in FINRA arbitration is typically much more streamlined. Investors can still gather the information they need to pursue their claims, but the shortened discovery period contributes significantly to the reduced timeline of FINRA arbitration.
  • Complexity – Overall, FINRA arbitration is far less complex than litigation in court. There are fewer procedural steps prior to the main hearing, and while going to court can involve presenting your case to a judge or jury, in FINRA arbitration all decisions are made by an arbitrator (or panel of arbitrators) who are experts in FINRA’s rules and the securities laws that establish investors’ legal rights.

Here is an overview of the major differences between FINRA arbitration and securities fraud litigation:

  • Statutes of Limitations

Under FINRA’s Rules, investors generally have six years to pursue fraud claims against their brokers and brokerage firms. The statute of limitations for pursuing a securities fraud claim in court is either two or five years in most cases (there are exceptions; so, even if it has been more than five years, you should still consult with a lawyer).

  •  Pre-Trial (or Pre-Hearing) Process

While FINRA arbitration involves discovery and various other pre-hearing procedures, the scope and timeline of these procedures are condensed compared to those in securities fraud litigation. The arbitration process prioritizes efficiency while still ensuring that investors are able to obtain the records and information they need to assert their legal rights.

  • Privacy

In FINRA arbitration, the arbitration process itself is kept confidential. However, the arbitration panel’s decision becomes public record. In contrast, the litigation process in court is generally public unless one or both parties successfully file to keep the case under seal. Even then, certain matters will still be open to the public. But, if the parties settle, the terms of their settlement will typically be confidential—this is true both in FINRA arbitration and in court.

  • Cost of the Process

Since litigation is more involved and often much longer in duration, seeking damages in court is generally more expensive than pursuing an award in FINRA arbitration. With that said, pursuing a securities fraud lawsuit will still be well worth it in many cases, and investors can work with their counsel to make an informed decision about how best to move forward.

Discuss Your Investment Fraud Case with a Lawyer at Zamansky LLC

If you need to know more about pursuing a claim for investment fraud in FINRA arbitration or in court, we encourage you to contact us for a complimentary consultation. To discuss your investment fraud case with a lawyer at Zamansky LLC, please call 212-742-1414 or request an appointment online today.

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“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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