We have discussed the FINRA arbitration at length in other blogs, so we have decided to focus on what steps an investor can take (outside of litigation) if they have been aggrieved by their financial advisor. While litigation/arbitration is typically the best option to recoup investment losses attributed to the acts/actions of your financial advisor, there are other non-litigation related steps you can take.
What is The FINRA Complaint Program
The FINRA complaint program is one of the resources available to investors who believe they might have been taken advantage of by their financial advisor. This is the best way for an investor to file a complaint against a firm, or one of its advisors. FINRA has the authority to take disciplinary actions against firms and their employees who have engaged in unethical behavior. At the end of FINRA’s investigation, they have the ability to levy fines and suspensions and can bar the financial advisor from the securities industry.
The Importance of Investor Education
FINRA is the largest self-regulatory organization in the United States and is charged with regulating brokerage and security firms. FINRA can be looked at as the “police” of the securities industry. The goal of FINRA is to make sure that every investor in the United States is protected from fraud, misconduct, and scams. FINRA was put in place to ensure all businesses that operate in the securities industry treat their investors fairly and conduct business honestly. FINRA oversees approximately of 630,000 financial advisors and 3,600 brokerage firms.
FINRA is a large supporter and provider of investor education. Being educated as an investor is one of the best ways to protect yourself from fraud or any type of malicious acts that may be perpetrated by a financial advisor. For this reason, FINRA offers investors various resources that can be accessed directly on the FINRA website. You can also learn who to contact and what steps to take should you feel the financial advisor/firm you are working with is not conducting business ethically.
What to Do as An Investor If You Have Been Treated Unfairly
The best non-litigation route for you, as an investor, to take if you feel you have been a victim of fraud or unethical practices, is to file a complaint via the FINRA Complaint Program.
Before filing a complaint, however, there are a few options to consider to see if the problem can be resolved short of filing a complaint. Investors have a right to question any transactions that they did not authorize or do not understand. If you believe your financial advisor has not offered a sufficient answer to an inquiry, you should contact the firm’s branch manager or compliance department, preferably in writing. With this approach, the investor has a paper trail that cannot be disputed down the road. The investor should also keep copies of any and all correspondence exchanged between them and the firm.
If you have taken these steps and are still not satisfied with the answer or result, you can and should file a formal complaint with FINRA. The online complaint form can be completed here. You also have the option of printing the complaint form and mailing it to FINRA’s address found on the website.
How FINRA Handles Complaints
When an investor files a complaint, FINRA will launch an investigation. If FINRA finds that the firm has acted unethically or in violation of the law and FINRA’s rules/regulations, FINRA can enforce appropriate sanctions on the financial advisor and/or the firm. If the offense is serious enough, FINRA has the option of passing the complaint to the Securities and Exchange Commission (“SEC”) and letting the SEC handle the offense. In cases of serious criminal matters, FINRA will inform the authorities and financial advisor and/or the firm may be prosecuted.
We note, you don’t have to go about this alone. At Schwartz Investor Advocates, we help investors recover investment related losses and can walk you through the process. Our experienced attorneys aggressively pursue claims on behalf of clients who have been damaged as the result of negligence, fraud or misconduct by their financial advisors and brokerage firms. Contact our office today!