SECURITIES LITIGATION, ARBITRATION & REGULATORY ENFORCEMENT

Most cases fall into one of two distinct categories: (1) A government proceeding, which is either criminal or regulatory in nature; or (2) a private proceeding, known as a “civil” proceeding. When the SEC, Department of Justice or some other government agency is not actively involved in the litigation, and instead two or more private parties are engaged in a dispute, it is a private civil dispute. While some of these cases are heard before courts, a substantial amount of securities litigation is actually conducted through the arbitration process.

In fact, FINRA’s securities arbitration forum is the most widely used dispute resolution method used by the securities industry. Securities arbitrations can, at times, seem quite similar to courtroom trials, but with a few crucial differences. Discovery is more limited, three arbitrators are selected instead of several more jurors, and the traditional courtroom rules do not apply. The most common example is a “customer complaint,” where an investor or group of investors sues their brokerage firm claiming that certain transactions were either unsuitable, unauthorized, or that various other securities laws and stock-trading rules were violated. The process begins with the customer's attorney filing what is known as a Statement of Claim, after which the accused brokerage firm or other defendant to the securities arbitration submits an Answer or Motions. The parties then engage in the discovery process, which often requires that the arbitrators decided motions. The arbitration panel is itself selected early on in the case. Finally, unless the case settles, there is an arbitration hearing at one of FINRA's hearing offices, where evidence is presented, testimony is taken, opening and closing arguments are made, much like at trial.

In addition, there is a subset of FINRA arbitrations that do not involve customers suing brokerage firms, but rather involve firms suing other firms or brokers. These are known as “intra-industry arbitrations” and usually involve requests for injunctive relief. That is, when a broker leaves one firm for another, they often take the clients they formerly serviced with them to their new firm. The former firm views these clients as its clients, while the broker views these clients as the broker's clients. This dispute is often resolved by FINRA arbitrators in expedited arbitration proceedings.

Our attorneys focus on defending securities brokers, broker-dealers, executives, and other financial advisors involved in all types of securities arbitrations.

Call Phillipson & Uretsky, LLP at (212) 571-1255 to learn more.