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Category Archives: Arbitration

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Is This The Beginning Of The End To Expungment Agreements

Posted in Arbitration, Broker-Dealer Regulation, Expungement, Financial Industry Trends, FINRA CRD, Registered Representatives

A frequent tool for settlement was to make a stipulated award that included expungement of the registered representative’s U-4 a condition of settlement.  FINRA recently announced that it is “developing rule changes that would prohibit the practice of conditioning settlements on an investor’s agreement not to oppose expungement.” It should come as no shock that… Continue Reading

FINRA Deputy Counsel Article on Expungements

Posted in Arbitration, Expungement, FINRA CRD

A must read is the article in this quarter’ s The Neutral Corner, published by FINRA Dispute Resolution, and authored by John D. Nachmann, Esq., Deputy Chief Counsel, FINRA Registration and Disclosure.  Mr. Nachmann’s article, “Limitations on the Types of Disclosure Events That May Be Expunged From the Central Registration Depository Through Arbitration,” provides a blueprint… Continue Reading

Former AP of Defunct Firm May Enforce FINRA Arbitration Pact

Posted in Arbitration, Securities Litigation

The California Court of Appeals reversed a lower court’s refusal to compel a dissatisfied investor to arbitrate its dispute with a former associated person of a now defunct FINRA member firm.  See Ronay Family Limited Partnership v. Tweed, Cal. App., D062195, 5/23/13. A FINRA rule rendering a claim against a former member ineligible for arbitration… Continue Reading

Florida Limitations Law Applies to Arbitration Proceedings

Posted in Arbitration

The Florida Supreme Court concluded that the state’s statute of limitations governing civil actions or proceedings applies not just to judicial actions, but to arbitrations as well.  See Raymond James Financial Services Inc. v. Phillips, Fla., No. SC-2513, 5/16/13. The court said that the investors commenced arbitration proceedings in 2005, contending the broker-dealer’s branch office… Continue Reading


Posted in Arbitration, Securities Litigation

The Tennessee Supreme Court ruled that it has subject matter jurisdiction to review a trial court’s order vacating an arbitration award while remanding the dispute to a new arbitration panel without expressly declining to confirm the award.  See Morgan Keegan & Co., Inc. v. Smythe, Tenn. Sup. Ct., No. W2010-01339-SC-R11-CV, (4/25/13); http://op.bna.com/srlr.nsf/r?Open=jkoo-979qp7. The Court interpreted… Continue Reading

Is There Any Reason To Arbitrate Customer Complaints

Posted in Arbitration, Raiding/Moving Firms, Registered Representatives

On September 18, the SEC approved a FINRA proposal that essentially does away with the ability to have an industry arbitrator serve on your panel.  So the question becomes, why bother arbitrating customer complaints. Without an industry arbitrator on the panel, you have no choice but to hire an expert witness because there will be… Continue Reading

Is FINRA Going To Be Nicer To Registered Representatives?

Posted in Arbitration, Broker-Dealer Regulation, Registered Representatives

That is the question on many people’s tongue these days in light of a recent FINRA announcement.  Apparently, FINRA is working on two separate initiatives to revamp its expungement process.  As it stands now, the process can be long and difficult.  A registered representative must prove to a panel that the customer’s complaint was false,… Continue Reading

Did You Know That FINRA Arbitrations Just Got More Expensive

Posted in Arbitration, Intra-Industry Arbitrations, Public Customer Arbitrations, Securities Litigation

Both the industry and customers liked FINRA arbitration because it was a relatively cost effective dispute resolution forum.  With FINRA Notice to Members 13-21 and effectively doing away with having an industry person on the panel, FINRA has just made arbitration more expensive for everyone. Without any industry presence on the panel, both customers and… Continue Reading

So Do You Really Want To Arbitrate Customer Claims

Posted in Arbitration, Broker-Dealer Regulation, Compliance and Supervision, FINRA Compliance, FINRA Enforcement, Public Customer Arbitrations, Securities Litigation

In the 17 plus years of defending broker-dealers in FINRA arbitrations, I and my clients have relied upon the fact that at least one arbitrator would have industry experience.  In my experience, having that presence did not create an unfair advantage for the firm.  Instead, it provided the panel with a knowledgeable resource that would… Continue Reading

Who Wants To Know What FINRA Has Planned For Your CRD

Posted in Arbitration, Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Registered Representatives

The Financial Industry Regulatory Authority (FINRA) recently announced that it expects to send a proposal to the SEC to make it easier for registered representatives to clear their record of black marks.  Up until now, the process for expungement has been drawn out and extremely limited in application. The primary issue FINRA is attempting to… Continue Reading

Is This The Beginning Of The End To Arbitrations

Posted in Arbitration, Broker-Dealer Regulation, Intra-Industry Arbitrations

This past week, members of the North American Securities Administrators Association lobbied Congress to do away with mandatory arbitration provisions from customer agreements.  In a speech before this group, SEC Commissioner Aguilar expressed that mandatory arbitration agreements must go.  Would this be a bad thing? Arbitration has be seen as the preference of the industry because… Continue Reading

Do You Really Think Class Actions Are A Thing Of The Past

Posted in Arbitration, Broker-Dealer Regulation, FINRA Enforcement, Public Customer Arbitrations, Securities Class Actions

The prudent answer to this question should be probably not, but we can hold out hope. A FINRA panel recently upheld a class action exclusion in a broker-dealer agreement to arbitrate contained in its customer agreement.  In other words, the provision prohibits a customer from seeking class action status against the broker-dealer, forcing all customer complaints… Continue Reading

Oh, Happy Days!! Non-Parties in FINRA Arbs May See Relief

Posted in Arbitration, Intra-Industry Arbitrations, Public Customer Arbitrations

The SEC agreed to a proposed change to the Financial Industry Regulatory Authority’s arbitration rules relating to subpoenas and orders directed towards non-party FINRA members and their associated persons.  See Release No. 34-68404; File No. SR-FINRA-2012-041 (December 11, 2012), and http://www.finra.org/Industry/Regulation/RuleFilings/2012/P158171.  These new rules will allow FINRA arbitrators to issue orders for the appearance of witnesses and… Continue Reading

Arbitration Is Still the King for Resolving Securities Disputes

Posted in Arbitration, Intra-Industry Arbitrations, Public Customer Arbitrations

Both federal and state courts are exceedingly reluctant to halt securities arbitrations.   As an example, a California federal court refused to issue a temporary restraining order stopping a securities customer arbitration.  In fact, the court was somewhat perturbed at even being bothered, indicating that TROs were “for emergencies only.”  See Stanchart Securities International Inc. v. Galvadon,… Continue Reading

Even Unconfirmed, Securities Arbitration Awards Bar Recovery

Posted in Arbitration, Intra-Industry Arbitrations, Public Customer Arbitrations

The Arkansas Court of Appeals approved the dismissal of complaint filed by securities investors because an arbitration award had resulted in other investors losing the same case.  See Elsner v. Kalos Financial Services Inc., Ark. App., No. CA 12-403, 11/7/12, and http://judicialview.com/State-Cases/arkansas/Civil_Procedure/Elsner-v-Kalos-Financial-Services-Inc./10/566455. The court refused to put much stock in the argument that an unconfirmed arbitration… Continue Reading

Is this FINRA’s First Play for RIA Oversight? Opening FINRA Arbitration to RIAs

Posted in Arbitration, Intra-Industry Arbitrations, Investment Adviser Regulation, Public Customer Arbitrations

FINRA is now permitting RIAs to participate in its arbitration process.  The details will be forthcoming. Traditionally, FINRA arbitrations were for broker-dealers to resolve their disputes.  This is a significant opening for FINRA.  Nonetheless, FINRA claims it is ready for RIA cases if the parties agree.  Further, there are differences in standards under federal law for both. … Continue Reading

Who Wants To Learn A Way To Insulate Themselves From Liability.

Posted in Arbitration, Compliance and Supervision, Corporate Governance, Internal Investigations, Public Customer Arbitrations, Registered Representatives

In our hyper-fast world, financial advisors, like many in the service sector, have become lazy.  Let me be clear, I think financial advisors are working harder than ever to service their clients in these challenging times for which they should be commended. The laziness to which I refer is that I see financial advisors taking… Continue Reading

Fox’s Gerry Norton Quoted in NJBiz

Posted in Arbitration, Uncategorized

Our partner, Gerry Norton, Chair of Fox Rothschild’s IP department, was recently quoted in NJBiz.  Gerry’s comments on this critical IP legal development are most insightful. See http://www.njbiz.com/article/20120816/NJBIZ01/120819888/-1/enews_dailyT2.

If Your Client Does Not Understand Your Recommendation, You Need To Do More

Posted in Arbitration, Broker-Dealer Regulation, Dodd-Frank, FINRA Compliance, Intra-Industry Arbitrations, Securities Legislation

The SEC recently completed the Dodd-Frank mandated study on financial literacy for retail investors and it revealed, not shockingly, an absence of basic financial literacy.  The study also found that it was important for retail customers to have a better appreciation of the costs associated with their investments, as well as conflicts of interest related… Continue Reading

If You Are Lucky, A Bee Sting Will Only Be A Bee Sting

Posted in Arbitration, Financial Industry Trends, FINRA Compliance, Public Customer Arbitrations, Securities Litigation

A few years ago, I defended a financial advisor over a bee sting.  The customer wanted to take the cash value out of a life insurance policy to buy a second home.  The advisor cautioned against doing so before completing underwriting on a new policy.  The customer ignored this advice, contacted the company directly, and… Continue Reading

Do FINRA Arbitrations Really Benefit The Industry?

Posted in Arbitration, Public Customer Arbitrations

There is a general sentiment that arbitrations favor the defense.  In fact, several years ago, there were several House and Senate bills supported by the trial lawyers that sought to amend the Federal Arbitration Act to end “forced” arbitrations.  In my experience, however, FINRA arbitrations may actually be making it easier for claimants to file… Continue Reading

My Client Was Illiterate, But Were Covered Calls Suitable?

Posted in Arbitration, Public Customer Arbitrations, Securities Litigation

This question confronted a registered representative that we defended.  Unfortunately, he did not ask himself that question until the middle of trial.  You see, the registered representative never knew his six grade educated, retired doorman client could not read when he sold him a covered call investment strategy. How can something so basic be missed? … Continue Reading

Arbitration in the 21st Century

Posted in Arbitration, Intra-Industry Arbitrations, Public Customer Arbitrations, Securities Litigation

We have previously blogged on changes in the arbitration process.  We have seen that commercial arbitration, and, in particular, the securities arbitration process, is undergoing a transformation. The backdrop for these changes is related to the belief that many consider the increased cost in arbitration to be the of the Americanization of the process.  That means, a higher cost for… Continue Reading