Finra Complaint Broker Dealer: Protecting Investors and Ending Misconduct

Finra takes complaints against broker-dealers very seriously, with a dedicated team of investigators and examiners working to protect investors and hold perpetrators accountable.

In 2019, Finra received over 75,000 complaints against broker-dealers, with the most common issues being sales practices and suitability.

Investors can file complaints online or by mail, and Finra will review the case and take action if necessary.

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FINRA is a non-governmental regulatory organization based in Washington, D.C. that oversees and enforces compliance with financial industry regulations among its members.

It monitors over 630,000 individual brokers and over 3,700 securities firms nationwide.

If you have a financial issue with your broker or brokerage firm, you can look to FINRA for legal recourse.

You can file a complaint against the financial advisor or stockbroker, and/or file a claim to begin a dispute resolution process known as “FINRA arbitration.”

Here are some common issues that may warrant a FINRA complaint:

A FINRA law firm can make the process easier and increase the likelihood of being compensated for losses. They can draft and review complaints, prepare you for the process, ensure no deadlines are missed, and build a legal strategy to maximize recovery.

Filing a complaint with FINRA is a straightforward process. The fastest and simplest way to start is by visiting the FINRA website at finra.org.

You can begin by navigating to the FINRA website and hovering over the "Have a Problem?" link in the header. Clicking on "File a Complaint" in the dropdown menu will bring you to a new page.

To file a complaint, click the "How to File a Complaint" link, and then scroll down until you see two red buttons. Click the button that says "File Online Complaint" for fastest processing.

You'll need to complete the first page of the form with as much detail as possible, without submitting any false information. The rest of the online complaint filing process will guide you through the necessary steps.

Here are the 6 steps to file a FINRA complaint:

Keep in mind that a FINRA complaint is primarily regulatory in nature, and its result usually leads to disciplinary action or sanctions against the broker or adviser involved. It may not necessarily lead to compensation for damages incurred.

Arbitration is a dispute resolution method used to resolve investment disputes, where one to three arbitrators review evidence and make a determination on whether compensation should be awarded. FINRA arbitration is a more formal process than mediation.

To request a FINRA arbitration, you must file an arbitration claim, either online or through the mail, which includes a Statement of Claim and a Submission Agreement. This process can be complex, and hiring a securities fraud attorney is highly recommended.

Mediation, on the other hand, is a lighter approach to dispute resolution that is voluntary for both parties. It's a faster and less expensive process than arbitration, but decisions are not binding, and a mediator can only suggest a possible solution.

To initiate an arbitration complaint, you'll need to file an arbitration claim with FINRA. This involves submitting a Statement of Claim, which outlines the details of your claim, including the parties involved and the amount sought in damages.

The claimant must also pay the respective fees to file the arbitration claim. Arbitrators are pre-selected using computer-generated lists, and the parties in the case will be shown a "disclosure report" for all arbitrators.

You'll need to rank and strike a certain number of arbitrators from the list. Much of the proceedings are carried out and accessible online via FINRA's Dispute Resolution Portal.

It's highly recommended to hire a securities fraud attorney to help you navigate the process. They can review your Statement of Claim and ensure it's accurate and complete.

Here's a step-by-step guide to filing an arbitration claim:

Keep in mind that filing a complaint with FINRA might preclude the option to arbitrate or litigate, and doesn't guarantee that you will receive damages. If you're seeking financial compensation for losses incurred, you may want to consider other options, such as arbitration or litigation.

Arbitration is a more formal process where decisions are final and imposed on the parties involved.

In contrast, mediation is a lighter approach to dispute resolution that's voluntary for both parties.

Decisions in arbitration are final, whereas a mediator can only suggest a possible solution and cannot enforce it.

Mediation is entirely voluntary, and all parties involved must agree completely to the mediator who will handle the case.

The primary benefit of mediation is its swiftness and relative inexpensiveness.

Both arbitration and mediation routes tend to be faster and less expensive than suing for fraud in the courts.

Filing a complaint with FINRA may not be enough to get compensation for financial losses, even if the broker is punished.

You may need to look beyond the FINRA Complaint Program to a dispute resolution method known as FINRA arbitration, where one to three arbitrators review your evidence and make a determination on compensation.

To request a FINRA arbitration, you must file an arbitration claim, either online or through the mail, which consists of a Statement of Claim, a Submission Agreement, and payment of fees.

You'll be shown a disclosure report for all arbitrators, and you can rank and strike a certain number of arbitrators from the list.

Much of the proceedings are carried out and accessible online via FINRA's Dispute Resolution Portal.

Hiring a securities fraud attorney is highly recommended when requesting a FINRA arbitration.

FINRA arbitration decisions are final and imposed, whereas mediation is a lighter approach to dispute resolution that is voluntary for both parties.

Mediation is a faster and less expensive option, and both parties can choose to switch to mediation during the arbitration process.

To begin a FINRA mediation, one or both parties must request one via FINRA's "Initiate a Mediation" page, and it's entirely voluntary.

All parties involved must agree completely to the mediator who will handle the case.

A competent securities fraud attorney is imperative when going the arbitration route, and you can ask your existing attorney if they can take the case on.

You can also contact various bar associations for a list of attorneys and do your own research on the attorney's website, social media, and news reports.

The true test of a securities fraud attorney is their ability to win cases and bring in commensurate damages for victims of securities fraud.

Consider reading: Seychelles Securities Dealer License: Compliance Essentials

FINRA takes the protection of senior investors very seriously. They have a podcast dedicated to explaining how they prioritize senior investors, highlighting the importance of this demographic.

FINRA bars individuals who take advantage of vulnerable investors, such as Ami Forte and Charles Lawrence, who were involved in churning the accounts of an elderly client with dementia.

FINRA requires broker-dealers to pay restitution to harmed customers. For example, Joseph Stone Capital was ordered to pay $1 million in restitution, while Merrill Lynch, Pierce, Fenner & Smith, Inc. was ordered to pay $15.2 million.

FINRA has a responsibility to protect seniors and vulnerable investors from financial harm. This includes ensuring that brokers and financial advisors act in their best interests and follow rules that prevent exploitation.

FINRA Rule 2111 requires brokers to have a reasonable basis to believe a transaction or investment strategy is suitable for the customer. This includes taking into account the customer's age, financial situation, tax status, and investment objectives.

On a similar theme: What Is an Investment Broker

FINRA has taken action against brokers who have failed to follow this rule, such as Ami Forte and Charles Lawrence, who were barred for their roles in churning accounts of an elderly client with dementia.

FINRA Rule 8210 empowers the organization to require brokers to provide documents and testimony related to any FINRA investigation or complaint. This rule is in place to help FINRA gather information and hold brokers accountable for their actions.

In some cases, FINRA may seek restitution for harmed customers. For example, in 2022, FINRA ordered Joseph Stone Capital to pay $1 million in restitution, and Merrill Lynch, Pierce, Fenner & Smith, Inc. to pay $15.2 million in restitution.

Here are some key FINRA rules that protect seniors and vulnerable investors:

If you or your family member has suffered losses due to unsuitable investment recommendations, you may be entitled to compensation.

If you're considering arbitration to fight for compensation after being defrauded by your stockbroker or financial advisor, you'll need a competent securities fraud attorney.

A good place to start is by asking your existing lawyer if they can take on your case. If they're not confident, they might be able to suggest someone who can.

You can also contact bar associations for a list of attorneys. FINRA recommends this, and it's a good starting point.

Fancy websites and social media accounts can be deceiving - the true test of a securities fraud attorney is their ability to win cases and bring in damages for victims.

To gauge an attorney's success, look for news reports featuring their wins. If they've won large cases, it's a good sign.