Serving Investors Throughout New York
Investing in the stock market can be challenging. Understanding investment vehicles like stocks, bonds, limited partnerships, annuities, hedge funds, derivatives and mutual funds can be overwhelming for investors. For that reason, many investors rely upon stockbrokers and financial advisors to provide suitable investment advice to protect their hard-earned money. While most brokers and financial advisors act in their customer’s best interest, some do not. When that happens, the broker or financial advisor is often in violation of the securities laws or the rules and regulations established by the Financial Industry Regulatory Authority (“FINRA”).
A Relationship Of Trust
The relationship between a broker or financial advisor and a customer is one of trust. Whether this relationship rises to the level of a fiduciary one, however, depends upon a number of factors, such as whether the customer looks to the broker or financial advisor for advice, the broker or financial advisor is aware that the customer is relying on him/her, the broker or investment advisor accepts that responsibility, and the customer places his/her trust and confidence in the broker or financial advisor to protect and manage their money. When a fiduciary duty exists, brokers and financial advisors are required to act in a reasonable and prudent manner when making investment recommendations so that investors have the ability to understand and assume the risks related to an investment. In the event the broker or financial advisor breaches their duty to their customer (or acts negligently or recklessly, or fails to disclose material information about an investment that would have affected the customer’s investment decision), investors have recourse through arbitration.
Freiberger Haber LLP represents investors in dispute resolution proceedings before FINRA.
The FINRA arbitration process is designed to protect investors from losses due to misconduct, such as violations of the securities laws, or sales practice violations, including:
- Unsuitable Investment Advice
- Excessive Trading/Churning
- Breach of Fiduciary Duty
- Unauthorized Trading
- Margin abuse
Investors typically enter into brokerage agreements with brokers or financial advisors that contain a mandatory arbitration clause. A mandatory arbitration clause obligates the parties to resolve any dispute in a FINRA arbitration. An arbitration proceeding, however, is not the same as a court proceeding. Arbitration is less formal. It is generally a faster and less expensive method to resolve a dispute. A neutral third party, or arbitrator, is selected to resolve the dispute. The arbitrator’s decision is final and binding.
Notably, an arbitration proceeding is private. Unlike a court proceeding in which all papers and pleadings are a matter of public record, the statement of claim, the rulings and findings of the arbitrator and any settlement between the parties remain confidential in almost all instances. Even on the rare occasion when a decision or settlement cannot be kept confidential, the statement of claim and the underlying facts revealed during the arbitration remain free from public view.
Freiberger Haber LLP is experienced in FINRA arbitration proceedings and has a thorough understanding of the securities laws and the FINRA rules and regulations. If you have questions concerning your investment portfolio, contact Freiberger Haber LLP. They work with aggrieved investors to recover the losses caused by broker or financial advisor misconduct.