If you are reading this article, you are probably an investor who has lost a substantial amount of money, Googled “FINRA Arbitration Lawyer,” clicked on a number of attorney websites, and maybe even spoken with a so-called “Securities Arbitration Lawyer” who told you after a five minute telephone call that “you have a great case;” “you need to sign a retainer agreement on a ‘contingency fee’ basis;” and “you need to act now because the statute of limitations is going to run.”
You may want to ask yourself whether that attorney is as bad as the stockbrokers you were concerned about in the first place.
Some attorneys will rush you to hire them before you speak to anyone else and not tell you about the clause in their contract that allows them to drop you as a client later on if they cannot get a quick settlement.
They will solicit you without a real case evaluation and/or without any explanation of Financial Industry Regulatory Authority (“FINRA”) proceedings.
The scenario above is not the way for attorneys to properly serve clients, and it is not the way we do business at The Law Offices of Robert Wayne Pearce, P.A.
If you are planning on speaking or meeting with us or any other attorney, let us introduce you to the FINRA arbitration proceeding by giving you some information in advance to help you understand the different stages of FINRA arbitration, what you should expect from skilled and experienced FINRA securities arbitration lawyers, and what you should expect to personally do in order to have the best outcome:
1. CASE REVIEW
Before we accept any case, our attorneys conduct a thorough interview of you to understand: the nature of your relationship with your broker; the level of your financial sophistication; the representations or promises made to you in connection with any investment recommendation; and your personal investment experience, investment objectives, and financial condition at the time of any recommendation or relevant time period.
We will review your account records, including, but not limited to: account statements; confirmations; new account opening documents; contracts; correspondence; emails; presentations; and marketing materials that you may have received in connection with your accounts and the investments made therein, etc.
Investors rarely contact our office without knowing whether they have suffered investment losses, but sometimes that occurs because the particular investor does not have all their records and/or is unsophisticated, inexperienced, and unable to decipher the account records they retained.
If you retained your account statements and provide them, we should be able to at least estimate (under the different measures of damages) the amount you may be able to recover if you win your arbitration proceeding.
If you do not have those records, we will help you retrieve them without any obligation so that all of us are fully aware of the amount we may possibly recover for you if we are successful in arbitration.
In addition, we will spend the time necessary to get to know you and the facts of your dispute to have a good chance of success in proving your case.
After all, it does not benefit either you or our law firm to file an arbitration claim that, months or years later, we discover has little chance of success.
Ultimately, we want to know, and so should you, whether or not you have a claim with merit and are likely to recover damages if we go through a full arbitration proceeding.
The fact is Attorney Pearce does not take cases unless he and his team believe you suffered an injustice and are likely to succeed at the final arbitration hearing.
2. THE STATEMENT OF CLAIM
Many of these young and/or inexperienced attorneys with flashy websites and Google Ad Word advertisements (to get them to the top of the page) are more interested in marketing and signing up cases to settle early than they are in going all the way and winning your case at a final arbitration hearing for a just result.
Oftentimes, they will insert your name in a form pleading, one that they use in every case, which states little more than if you (the “Claimant”) were an investor with brokerage firm ABC and stockbroker XYZ (the “Respondent(s)”) made misrepresentations, failed to disclose facts, made unsuitable recommendations, and violated laws 123, you are entitled to damages.
They are unwilling and/or fail to take the time necessary to study the strengths and weaknesses of your case and write a detailed Statement of Claim (also referred to as the “Complaint”) with all of the relevant facts necessary to inform the arbitrators what happened and why you are entitled to recover your damages.
That is not the way Attorney Pearce, with over 40 years of experience with investment disputes, files a Statement of Claim, the first and sometimes the only document that the arbitrators will read before the final arbitration hearing.
3. THE ANSWER
After we file the Statement of Claim and it is served, the brokerage firm and/or stockbroker will have forty-five (45) days to file the Answer to your allegations.
Oftentimes, the Respondent(s) will ask for an extension of time to file the Answer and we will give it to them provided no other deadline is extended, particularly the deadlines associated with the selection of arbitrators and scheduling of the initial pre-hearing conference, where all of the other important deadlines and dates of the final arbitration hearing are scheduled.
Some clients have asked why would you give them extra time to file their best Answer? Well, we believe after 40 years of doing these FINRA arbitrations, that it is better to know the story they intend to tell the arbitrators early on and lock them in so we can come up with the best strategy and all the case law necessary to overcome their best defenses and win your arbitration.
In other words, we would rather know about the defense early on than be surprised at the final hearing. Besides, Respondent(s) can always try to file an Amended Answer later on, and if they already requested and received one extension of time, they will have less incentive to do so and the arbitrators will have less of a reason to grant them that additional opportunity to change their defense.
4. ARBITRATOR SELECTION
The next and perhaps the most important stage of any FINRA arbitration proceeding is the selection of the arbitrators who will decide the pre-hearing matters, like motions to dismiss and motions to compel the production of documents, hear the testimony and review the documented evidence, and make the decision about who wins or loses and how much damages are awarded, if any.
We will investigate potential arbitrators and strategically rank the best on the lists supplied for selection of the arbitrators on your case.
We conduct a thorough investigation because arbitrators do not always decide the case based upon the evidence and make fair damage awards.
Some arbitrators lie about their backgrounds or fail to disclose important facts about themselves just to get selected as an arbitrator and earn some income.
Some arbitrators have a hidden bias, prejudice, or another agenda (particularly older retired and/or career arbitrators); that is, to get selected and give a small arbitration award thinking if they do that they will get selected again and again by Claimant(s) and Respondent(s) and be able to support themselves.
Many young and inexperienced attorneys will simply review the profiles and rank the arbitrators as quickly as possible without any due diligence or other investigation of the potential arbitrators’ disclosures and background.
That is not the way we select arbitrators at The Law Offices of Robert Wayne Pearce, P.A.
Attorney Pearce has participated in hundreds of FINRA arbitrations over his 40 year career and selected hundreds if not over a thousand arbitrators for his clients’ cases.
The general selection procedure is that FINRA supplies three (3) lists of arbitrators: a list of ten (10) experienced public chairpersons; a list of fifteen (15) public arbitrators (some with no prior experience); and ten (10) industry related arbitrators, for the parties to strike and rank in order of preference.
We have researched and maintained files on thousands of arbitrators in the nationwide FINRA pool, that contain their old profiles, awards previously entered, and our independent research on the internet and from colleagues who had prior experience with them. So we know from our prior research and experience who the good and bad arbitrators on the lists are. But we don’t stop there!
Every arbitrator on every list is screened again for your case.
We research and/or update their backgrounds on the internet to make sure we know, for example: their political party affiliation and donations; clubs and organizations; and education and work history, to make sure that they accurately and fully disclosed all of those material facts on their arbitrator profiles and disclosure reports.
We reach out to our network of attorneys for further comment on particular arbitrators, good and bad. We not only select our best arbitrators but anticipate our opponent’s likely selections and ranking order.
Generally, we can predict which arbitrator on the lists will be ranked or struck by the other side and rank the rest in the order we believe will get us the best arbitrators remaining on the list for appointment by FINRA in your case.
Sometimes the lists of arbitrators offer a good number of arbitrators for one side or the other. Whatever the list may be, you can be assured that we will take the time to investigate and rank the best arbitrators in our order of preference on the ranking form provided.
Shortly after each party submits their lists, FINRA will contact the highest ranked arbitrators in each of the categories until the three (3) person arbitration panel is appointed.
5. THE INITIAL PRE-HEARING CONFERENCE
Approximately three to four months after your claim was filed, the arbitrators will be appointed by FINRA and the Initial Pre-hearing Conference (“IPHC”) with the arbitrators and attorneys will take place to schedule important dates in the arbitration proceeding, including the dates for the final arbitration hearing, when the testimony and evidence is presented like a trial.
The arbitrators will also set deadlines for the parties to: finish making document requests and producing documents; file motions to dismiss; file motions to compel discovery; subpoena third parties to produce documents and/or appear at the final hearing to give testimony; file pre-hearing evidentiary motions in limine; and file pre-hearing briefs summarizing the case with memorandums of law on the important issues relating to the claims and defenses.
Some law firms delegate the IPHC to junior partners or associates, but not us. Attorney Pearce is the lead attorney and handles all of the hearings in your case.
The IPHC is the first opportunity to meet and learn about the members on your arbitration panel, and the more contact we have with them before the final hearing the better to help us in your case.
6. THE DISCOVERY (DOCUMENT AND INFORMATION EXCHANGE) PROCESS
The first round of discovery is mandated by FINRA rules and includes a list of documents that investors must supply to Respondent(s) and another list of documents the Respondent(s) must supply to Claimant(s) (the “Discovery Guide”).
Those documents are “presumptively discoverable” and supposed to be exchanged by the parties forty-five (45) days after the Answer was initially due to be filed.
At The Law Offices of Robert Wayne Pearce, P.A. we request that you gather those documents when you retain us so we can review and consider the information in them before we prepare and file your Statement of Claim; it is important for us to know the good and bad information before your documents are exchanged.
In addition to requesting and/or producing the Discovery Guide documents, the parties will almost always ask each other to produce other documents they deem to be relevant to the claims and/or defenses.
These additional requests, and what can happen if there are disagreements, are governed by FINRA rules and procedures, including, motions to compel and motions for sanctions.
Oftentimes, the crafting of discovery requests and review of production is delegated to junior partners and associates at our law firm.
Once again, Attorney Pearce, together with his staff, crafts the additional discovery requests to obtain all of the relevant documents and information to prove your claims and avoid probable defenses.
He reviews all of the documents exchanged in the discovery process, knowing how important it is for a lead trial attorney to have a handle on all of the facts and evidence.
Mediation is generally (not always) part of the FINRA arbitration process; it is not mandatory and not binding unless the parties agree in writing.
Mediation is a formal settlement conference with a neutral mediator, a professional who attempts to get the parties to compromise and decide how they want to settle their dispute before it goes to a final arbitration hearing and the arbitrators make their final and binding decision.
At The Law Offices of Robert Wayne Pearce, P.A., we generally do not recommend our clients participate in any mediation until we have reviewed all of the documents and information exchanged in the discovery process, researched the law, analyzed all of the strengths and weaknesses of the evidence in your case, hired our expert witnesses and received their opinions and damage analyses, and formed our own opinion on the reasonable settlement value of your case.
Having settled hundreds of cases in mediation over his 40 year career, Attorney Pearce personally knows most of the mediators that the brokerage firms will agree to hire to help resolve the dispute before the final hearing.
This is usually a one day process but may extend over many weeks and months of negotiations before any agreement is made typically in complex cases with multiple parties and involving large amounts of damages.
8. PREPARATION FOR ARBITRATION
We prepare for battle in every single case we accept. We know if do not prepare, and then do not prepare more, we will not have the best outcome in our settlement negotiations (directly or through mediation) or at the final arbitration hearing when we present the evidence and argue the law that entitles you to an award for all the damages you suffered.
We do that by reviewing every document (good and bad), analyzing all of the facts and law relevant to every claim, and formulating a strategy that incorporates the best theme for arbitrators to understand and tie together the testimony and other evidence in support of your best claims and maximizes your opportunity to recover all of your losses.
We fight for Subpoenas and/or Orders of Appearance for all necessary witnesses, select and organize your documented evidence in trial exhibit books, prepare Arbitration Pre-Hearing Briefs that discuss the applicable law to all of your claims and the other side’s bogus defenses and prepare what we call “pocket briefs” on issues the other side might try to slip before the arbitrators during the course of the final hearing.
With regard to witnesses, we outline the important issues and select the important documents to help them present the best testimony in our direct case and impeach the stockbroker and the Respondent(s)’ other witnesses during cross-examination.
You can count on the best preparation so you are not surprised by any question asked by us, the Respondent(s)’ attorneys or the arbitrators.
This process involves hundreds of hours in some cases, and that is our commitment to all of our clients at The Law Offices of Robert Wayne Pearce, P.A. You should have the most prepared group of attorneys and witnesses in the final hearing room.
9. THE FINAL HEARING
If you are unable to settle your case through mediation or direct negotiations then the next step is to have the dispute resolved by the arbitrators at the final arbitration hearing, which could last days or weeks depending upon the complexity of the issues, number of parties and lawyers, number of witnesses, volume of documented evidence, and the amount in controversy.
We will be able to reasonably estimate very early on in the case how long the final hearing will last and the associated expenses we may need to advance on your behalf.
The hearings are generally held in one of FINRA’s Regional Offices or Regus office or hotel that FINRA regularly conducts hearings in in the state where you reside.
You are expected to attend the full hearing unless you are excused from attending due to some medical reason or other disability; and if you do not attend for some other less compelling reason, you should not expect the arbitrators to take your claim seriously and act as favorably as they might if you were there every day.
The Chairperson of the Arbitration Panel will control the hearing much like a Judge in a Courtroom albeit with less formality and less adherence to evidentiary rules and procedures.
The arbitration hearing will typically proceed in the following order: there will be opening statements from each party’s lawyer about what they intend to prove; evidence, including trial exhibits and witness testimony, will be presented; the lawyers will be allowed to cross-examine the witnesses; the arbitrators may question the witnesses; and closing remarks will be made by each lawyer about what the evidence actually proved or failed to prove in the case.
At the end, the Chairperson will ask each of the parties whether they had a full and fair opportunity to be heard and present all of their evidence and close the record, and the arbitrators will make their decision.
Attorney Pearce has participated as lead trial attorney in more than one hundred of these arbitration proceedings, so he is one of the most experienced securities arbitration attorneys in the country.
10. THE AWARD
FINRA arbitration rules and procedures require arbitrators to render their verdict in the form of a written arbitration decision (the “Award”), generally within thirty (30) days of the closing of the record.
The Award is several pages with a brief description of the parties, the claims and defenses, relief requested, other issues decided during the course of the arbitration proceeding, and the final decision about who won and how much either party won on their claim or counterclaim, if anything.
Arbitrators have the power to award compensatory damages under a multitude of theories or different measures of damages, pre-judgement and post-judgement interest, attorney fees, arbitration fees and expenses, and punitive and any other damages requested and permitted under the law or in equity.
The arbitrators are not required to give any explanation of why they ruled the way they did on anything unless the parties both agreed they wanted an explanation and paid the requisite fees.
The arbitrators are the final decision makers, and even if they make a mistake, their decision is final and only reversible on appeal for very limited reasons such as: fraud, corruption, evident partiality, gross misconduct prejudicing the rights of a party during the proceeding, or exceeding their powers as agreed to by the parties in their arbitration agreement.
Unless a party files a Petition to Vacate the Award in a timely manner, FINRA requires their members to pay all awards in 30 days and automatically adds interest at the stated rate in the award or legal rate of interest thereafter until paid in full.
If the party fails to abide by the Award, the other party can go to court and file a Petition to Confirm the Award, convert it into a Final Judgment and levy upon the other party’s assets like any other Judgment, something the attorneys at The Law Offices of Robert Wayne Pearce, P.A. have had to do, but only in a few cases.
CONTACT US FOR A FREE INITIAL CONSULTATION WITH EXPERIENCED FINRA ARBITRATION ATTORNEYS
The Law Offices of Robert Wayne Pearce, P.A. have highly experienced lawyers who have successfully handled many managed account cases and other securities law matters and investment disputes in FINRA arbitration proceedings, and they will work tirelessly to secure the best possible result for you and your case.
Attorney Pearce and his staff represent investors across the United States on a CONTINGENCY FEE basis which means you pay nothing – NO FEES-NO COSTS – unless we put money in your pocket after receiving a settlement or FINRA arbitration award.
For dedicated representation by an attorney with over 40 years of experience and success in structured product cases and all kinds of securities law and investment disputes, contact the firm by phone at 561-338-0037, toll free at 800-732-2889 or via e-mail.