Nov 07

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RIA disputes can now use FINRA arbitration

FINRA opened its arbitration system to Registered Investment Advisors. Until now, FINRA arbitration has been used by broker-dealers. FINRA indicates that a formal announcement will occur soon, but they have already begun accepting RIA cases.

FINRA operates the largest dispute resolution forum in the securities industry. FINRA reported that it closed 3,747 arbitration cases this year as of September 30. Over the same period last year, 3,394 new cases were opened.

Arbitrations involving Registered Investment Advisors will include smaller claims. FINRA conducts simplified arbitrations in which the amount in dispute is $50,000 or less, exclusive of interest and expenses. In this simplified process, only one arbitrator is used (unless the parties request otherwise), and no hearing occurs (unless the claimant requests one).

In August 2012, FINRA expanded a member’s liability to customers.


About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

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