FINRA arbitration vs FINRA complaint: one reports broker misconduct to the regulator, the other is how investors seek recovery of investment losses.
If you lost money because of a financial advisor or brokerage firm, you may have heard that you can "file a complaint with FINRA." Before you do, it helps to understand FINRA arbitration vs FINRA complaint, because the two are not the same thing. A regulatory complaint reports possible misconduct to the regulator. A FINRA arbitration claim is the process investors typically use to seek recovery of investment losses.
Confusing the two can be costly, particularly if an investor files a regulatory complaint and then waits, believing FINRA is pursuing compensation on the investor's behalf.
The Financial Industry Regulatory Authority, or FINRA, regulates brokerage firms and financial professionals registered with FINRA. Investors may submit a complaint to FINRA concerning suspected misconduct by a brokerage firm or financial professional.
FINRA may investigate the allegations and, when appropriate, bring a disciplinary action. Possible sanctions include fines, suspensions, or barring a financial professional from the securities industry. But the regulatory complaint process is not primarily a process for an individual investor to pursue damages from a brokerage firm.
A FINRA complaint tells the regulator what happened. It does not substitute for bringing your own claim for your losses.
FINRA arbitration is different. FINRA operates a dispute-resolution forum in which investors can bring claims against brokerage firms and financial professionals. Instead of simply asking FINRA to investigate misconduct, the investor becomes a claimant and affirmatively seeks compensation.
The process generally begins by filing a Statement of Claim describing what happened, why the brokerage firm or financial professional may be responsible, and the damages or other relief requested. The brokerage firm has an opportunity to respond. The parties generally exchange documents and evidence, and if the case does not settle, it may proceed to a hearing before one or more FINRA arbitrators. The arbitrators can issue a binding award. You can read more about how FINRA arbitration works.
| Question | FINRA Regulatory Complaint | FINRA Arbitration Claim |
|---|---|---|
| Main purpose | Report suspected misconduct to the regulator | Seek recovery of investment losses |
| Who drives it | FINRA decides whether to investigate | The investor files and pursues the claim |
| Typical outcome | Fines, suspension, or a bar from the industry | A settlement or a binding arbitration award |
| Money back to you | No assurance of payment or return of funds | The forum in which damages are pursued |
| Deadlines | No claim is preserved by filing one | Eligibility and limitations periods apply |
The question is whether you are reporting misconduct to a regulator or pursuing your own recovery. These are separate processes, and an investor may pursue both.
One potentially costly mistake is submitting a complaint to FINRA and then waiting for the regulator to resolve the matter. FINRA cautions investors that there is no assurance its regulatory action will result in payment or the return of funds or securities, even if FINRA ultimately takes disciplinary action.
Meanwhile, legal deadlines may continue to run. FINRA arbitration has eligibility requirements, including a general six-year eligibility provision under FINRA Rule 12206. Other federal or state statutes of limitation may also apply depending on the claims and circumstances. An investor who believes a brokerage firm or financial professional caused substantial losses should have the potential claim evaluated promptly rather than waiting for the outcome of a regulatory complaint.
Investment-loss cases can be complicated. An investor may know that something went wrong without knowing whether the problem involved unsuitable recommendations, excessive concentration, misrepresentations, inadequate supervision, or another violation.
Soreide Law Group represents investors nationwide in FINRA arbitration claims against brokerage firms and financial professionals. The firm can review the circumstances surrounding an investor's losses, brokerage records, investment recommendations, and the financial professional's history to determine whether there may be a viable claim for recovery.
Yes. They are separate processes, and an investor may pursue both. Filing a regulatory complaint does not start an arbitration claim, and it does not preserve your right to pursue one.
FINRA cautions that there is no assurance a regulatory action will result in payment or the return of funds or securities. Recovery of investment losses is generally pursued through FINRA arbitration.
FINRA Rule 12206 contains a general six-year eligibility provision, and other federal or state statutes of limitation may also apply. Because deadlines can be shorter than investors expect, a potential claim should be evaluated promptly.
Before simply filing a complaint with FINRA and waiting, find out whether you may have a FINRA arbitration claim to recover your investment losses.
Call Soreide Law Group at 888-760-6552 or contact the firm online for a no-cost consultation.
Soreide Law Group represents investors in FINRA arbitration matters throughout the United States.
Prior results do not guarantee a similar outcome. This article provides general information and is not legal advice.
FINRA arbitration vs FINRA complaint: one reports broker misconduct to the regulator, the other is how investors seek recovery of investment losses.
What investors should know about leveraged tax-loss harvesting, short positions, fees, and suitability. Tax-aware long-short investing can be presented as a sophisticated way to generate capital losses and reduce current taxes. But it is not merely a tax-planning overlay. It is an active, leveraged investment strategy that can produce substantial economic losses, high carrying costs, […]
Investors may have suffered financial harm by securities broker David Andrew Kangas [CRD: 6591398, Richmond, Virginia], given the public information found on Financial Industry Regulatory Authority (FINRA) BrokerCheck. Kangas has worked for WealthForge Securities LLC since November 1, 2019. Keep reading to find out more about Kangas’s disclosures. WealthForge Investor Accused Kangas Of Breach Of […]
Phone:
Fax: 1-954-760-6553
Email: info@securitieslawyer.com