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If your broker or financial advisor lost your money through fraud, negligence, or unsuitable recommendations, you likely have the right to file a claim through FINRA arbitration. But most investors have never been through this process before, and the unfamiliar territory can feel overwhelming.
The Frankowski Firm has represented investors in FINRA arbitration proceedings for over 25 years. If you believe you have a claim, contact us today for a free, confidential consultation. You pay nothing unless we recover your losses.
FINRA (the Financial Industry Regulatory Authority) operates the largest securities dispute resolution forum in the United States. Nearly all brokerage account agreements contain a mandatory arbitration clause, which means that if you have a dispute with your broker or brokerage firm, you will almost certainly resolve it through FINRA arbitration rather than in court.
This guide walks through each stage of the process so you know what to expect, what documents you will need, and how long each phase typically takes.
FINRA arbitration is a method of resolving disputes between investors and their brokers or brokerage firms outside the traditional court system. Instead of a judge and jury, a panel of one or three arbitrators hears the evidence and issues a binding decision called an “award.”
The process is generally faster and less formal than litigation, though it follows a structured sequence of steps. Cases involving claims of $100,000 or less are typically decided by a single arbitrator, while larger claims go before a three-person panel. For claims of $50,000 or less, FINRA offers a simplified arbitration track where the decision is made based on documents alone, without an in-person hearing.
Understanding the difference between arbitration, litigation, and mediation is also important. Arbitration results in a binding decision, while mediation is a voluntary negotiation process. Litigation takes place in court and is rarely available for brokerage disputes because of mandatory arbitration clauses.
Before filing, a qualified securities arbitration attorney should review the facts of your case. Not every investment loss is the result of misconduct. Markets go down, and losses alone do not prove wrongdoing.
An attorney will examine whether your broker or advisor engaged in conduct that violated securities laws or FINRA rules. Common grounds for claims include:
During the initial consultation, gather your account statements, trade confirmations, correspondence with your broker, and any marketing materials you received. These documents help your attorney assess the strength of your claim and estimate potential damages you may be able to recover.
Once you decide to proceed, your attorney prepares and files a Statement of Claim with FINRA. This document lays out the facts of your case, identifies the parties you are filing against (called “respondents”), describes the misconduct, and states the amount of damages you are seeking.
Filing requires a submission fee that varies based on the amount of the claim. According to FINRA’s current fee schedule:
After the claim is filed, FINRA serves it on the respondents, who then have 45 days to submit an Answer responding to the allegations. Respondents may also file counterclaims against the investor, though this is not common.
One of the most strategic parts of the process is selecting who will decide your case. FINRA uses a computerized system called the Neutral List Selection System (NLSS) to generate a list of potential arbitrators.
For a three-person panel (claims over $100,000), FINRA provides two lists: one of “public” arbitrators (individuals without securities industry ties) and one of “non-public” arbitrators (people with industry experience). Each side can rank the candidates and strike names they do not want.
Your attorney’s experience with specific arbitrators can be a significant advantage at this stage. An attorney who has handled hundreds of FINRA cases will recognize names, track records, and tendencies that can influence the outcome. This is one of the key reasons hiring a securities arbitration attorney matters.
After the panel is selected, both sides exchange relevant documents. Discovery in FINRA arbitration is more limited than in court. Depositions and interrogatories (written questions under oath) are generally not permitted unless the panel orders them in exceptional circumstances.
However, each side can request and must produce relevant documents. For investor claims, common documents requested from the brokerage firm include:
Your attorney may also retain a financial analyst to review your account data, calculate the losses attributable to misconduct, and prepare a damages report. The Frankowski Firm works with experienced financial analysts who can quantify damages and present them clearly to arbitrators.
If you lost money due to broker misconduct and want to understand your options, call the Frankowski Firm at 888-741-7503 for a free case review. We only get paid if you do.
Before the evidentiary hearing, the panel typically schedules one or more pre-hearing conferences. These conferences address scheduling, discovery disputes, and procedural matters. The panel sets deadlines for:
Either side may file motions before the hearing. The most common pre-hearing motion is a motion to dismiss, where a respondent argues the case should be thrown out before a hearing. FINRA rules make these motions difficult to win, and panels deny them in most cases, but they can add time and expense to the process.
The hearing is the centerpiece of the arbitration process. It is structured similarly to a trial but with less rigid procedural rules. Here is what happens:
Opening statements: Each side presents an overview of their case and what the evidence will show.
Presentation of evidence: The claimant (the investor) presents their case first. This includes calling witnesses for direct examination, introducing documents into evidence, and presenting testimony. The respondent can cross-examine each witness.
Respondent’s case: After the claimant rests, the respondent presents their evidence and witnesses. The claimant’s attorney then has the opportunity to cross-examine.
Closing arguments: Both sides summarize the evidence and explain why the panel should rule in their favor.
Hearings typically last two to five days, depending on the complexity of the case. They can take place in person at a FINRA hearing location near the investor’s residence or, in some cases, by video conference. The rules of evidence are more relaxed than in court. Arbitrators may consider evidence that a judge might exclude, which can work in the investor’s favor when the brokerage firm has withheld information or when the misconduct is difficult to prove through traditional channels.
After the hearing concludes, the arbitration panel deliberates and issues a written award. FINRA rules require the panel to issue its decision within 30 business days of the hearing’s close.
The award identifies the prevailing party and the amount of damages, if any. Awards may include:
One important characteristic of FINRA arbitration awards: they are final and binding. Unlike court verdicts, there is very limited ability to appeal. A party can challenge an award in court only on narrow grounds, such as arbitrator corruption, fraud, or the panel exceeding its authority. Panels are not required to explain their reasoning, and most awards are short documents that state only the result.
From filing to award, the process typically takes 14 to 18 months. Here is a general timeline:
| Phase | Typical Duration |
|---|---|
| Filing and respondent’s answer | 2 to 3 months |
| Arbitrator selection | 1 to 2 months |
| Discovery and document exchange | 3 to 6 months |
| Pre-hearing conferences | 1 to 2 months |
| Evidentiary hearing | 2 to 5 days (scheduled 3 to 6 months out) |
| Award issued | Within 30 business days of hearing close |
Many cases settle before reaching a hearing. According to FINRA’s published statistics, roughly 70% of cases that enter arbitration are resolved through settlement or withdrawal before an award is issued. An experienced attorney can help you evaluate settlement offers against the likely outcome at a hearing.
Costs vary depending on the size and complexity of the case. Filing fees are set by FINRA based on the claim amount. Hearing session fees (charged per hearing day) apply and are split between the parties unless the panel orders otherwise.
Many securities arbitration attorneys, including the Frankowski Firm, work on a contingency fee basis. This means you pay no upfront costs or hourly fees. The firm covers all case expenses, and you only pay a fee if the firm recovers money on your behalf. This arrangement removes the financial barrier that prevents many defrauded investors from pursuing their claims.
Ready to find out if you have a case? Contact the Frankowski Firm for a free, no-obligation consultation. Call 888-741-7503 or fill out our online form.
In most cases, no. Nearly all brokerage account agreements include a mandatory arbitration clause requiring disputes to be resolved through FINRA. Once you sign a brokerage agreement with this clause, you agree to arbitration rather than court proceedings. A limited number of claims, such as those involving unregistered securities or parties outside FINRA’s jurisdiction, may be eligible for court.
FINRA does not require you to have an attorney, and some investors represent themselves. However, brokerage firms will always be represented by experienced defense counsel. A securities arbitration attorney understands FINRA’s procedural rules, knows how to build a compelling case, and can identify damages you might not recognize on your own. The Frankowski Firm has represented investors in hundreds of FINRA arbitrations across the country.
FINRA’s eligibility rule requires claims to be filed within six years of the event giving rise to the dispute. State statutes of limitations may also apply and can be shorter. Because timing is critical, investors who suspect misconduct should consult an attorney as soon as possible. Waiting too long can bar your claim entirely.
FINRA uses its Neutral List Selection System (NLSS) to randomly generate lists of potential arbitrators. Each party can rank and strike candidates. For cases with three arbitrators, at least two must be “public” arbitrators with no securities industry ties. Your attorney’s familiarity with individual arbitrators is a significant strategic advantage during this selection process.
According to FINRA’s published dispute resolution statistics, investors who proceed to a hearing receive some monetary award in approximately 40% to 45% of decided cases. However, this figure does not account for the majority of cases that settle before reaching a hearing, often on terms favorable to the investor. An experienced attorney can help you evaluate whether your case is likely to succeed.
The FINRA arbitration process gives defrauded investors a real path to recover their losses. While the process involves multiple stages and can feel complex, having an experienced attorney by your side makes a measurable difference in both the process and the outcome.
The Frankowski Firm focuses exclusively on representing investors in securities arbitration and fraud cases. With over 25 years of experience, Richard Frankowski and his team have recovered millions of dollars for investors nationwide. Every consultation is free and confidential, and you will never pay a fee unless the firm wins your case.
If you suspect your broker or financial advisor caused you to lose money through misconduct, do not wait. The six-year eligibility window can close faster than you expect. Contact the Frankowski Firm today or call 888-741-7503 to discuss your case.