Investor Lawyers Blog
A recent announcement from the Financial Industry Regulatory Authority stated that arbitration is open to disputes between investors and registered investment advisers, or RIAs. According to securities fraud attorneys, this is good news for investors who have been the victims of RIA fraud but can’t afford costly court proceedings. It has been unclear for quite some time whether the arbitration system was available to complaints against investment advisers, who are overseen by the Securities and Exchange Commission. But now, this November 1, 2012 guidance posted on FINRA’s website indicates the regulatory authority is, in fact, accepting those cases, though they are subject to certain conditions.
Investment fraud lawyers say that clients of investment advisers usually resolve disputes in court or alternate forms of arbitration, but these processes can be time-consuming and expensive. RIA arbitration disputes are typically heard by JAMS Inc. or the American Arbitration Association, which can cost tens of thousands of dollars more than FINRA arbitration. Furthermore, FINRA arbitration is more cost-effective and less time-consuming than court proceedings.
Securities fraud attorneys have been asking FINRA to make their arbitration proceedings available to clients of investment advisers and, it seems, the regulatory authority is listening despite the fact that many investment advisers oppose the idea. The change was mentioned by Linda Fienberg, head of FINRA’s dispute resolution unit, at a conference held by PIABA, the Public Investors Arbitration Bar Association, in Texas.