Never Settle for Firm Representation During FINRA Arbitration

You have recently been named as a respondent in a FINRA arbitration filed by a customer against you and your firm. What should you do? The answer is simple: hire your own attorney

You might believe that you can get by without your own representation. After all, being represented by the firm’s attorney is less expensive, and the firm appears to be on your side. While that could be true, an inherent conflict exists that’s not always clear, and it boils down to how FINRA’s customer complaint reporting requirements differ for advisors, versus broker-dealers. 

If you view your firm’s BrokerCheck profile, you’ll see that there are no individual disclosures for customer complaints. Download the detailed report, and the only disclosures related to customer complaints that you find there will relate to cases that resulted in an award assessed against the firm, in favor of the customer. 

While the firm may agree that you did nothing wrong, it will be highly motivated to settle a matter before it ever proceeds to arbitration. Despite the fact that the firm will receive no blemish on its BrokerCheck profile, the same cannot be said for yours. You will have a pending disclosure on BrokerCheck until the case closes. If the firm settles for more than $15,000, that disclosure will become permanent, unless you successfully obtain expungement.

You should request expungement when:

  • the firm settles for more than $15,000, 
  • the firm has an award assessed against it, or
  • you already have a separate disclosure on your record from the customer’s original complaint that was made before it evolved into a formal arbitration claim.

You might consider requesting expungement in the underlying matter. Your firm may request it on your behalf, but if the firm chooses to settle, your expungement claim will likely be dismissed along with the rest of the claims. You will then need to hire counsel to represent you in an expungement-only case. Even if the case for the underlying matter goes to a hearing, your firm’s attorney will likely exert lackluster effort in advocating for your expungement request, as expungement of disclosures on individual advisors’ records is typically not a high priority for a firm. 

When you hire your own counsel, you can choose to defend the claims against you in arbitration and potentially avoid having to personally contribute to any sort of settlement or award. Hiring your own attorney also ensures that you will have representation zealously advocating for your expungement request. 

AdvisorLaw, LLC represents advisors in customer arbitrations and is the industry expert in expungement cases. We are ready to help.

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